Ownership

A startup that wants to build a mobile data network to fuel the Internet of Things is trying to convince regulators to let it use crucial airwaves. It's the second time the company, now called Ligado Networks, has fought this battle. Its previous iteration, backed by Phil Falcone and called LightSquared, hit a dead-end 5 years ago. Now it's back with a new name, lots of money and well-connected allies as it tries to strike gold with connected devices, which it says it can serve using a combination of satellite airwaves and traditional spectrum — creating a sort of hybrid network. If successful, Ligado could become an important Internet of Things player and produce a big payout for big-name investors like Centerbridge Partners, Fortress Investment Group and J.P. Morgan Chase (the industrial Internet of Things market could be worth $110 billion by 2020, according to estimates).

But Ligado's years-long corporate drama shows the risks involved in making bets on technologies that hinge on regulatory approval. FCC Chairman Ajit Pai hasn't tipped his hand, and there are no indications that a decision is imminent. "We have no update to provide that this point. We're studying the issue," he said recently, adding the agency is listening to all stakeholders. But Ligado is on the clock: it was reported earlier in 2017 that the company was working with bankers to explore a possible sale or find another investment.

House Commerce Committee Ranking Democratic Reps are demanding answers from the Federal Communications Commission about its “favorable treatment” of Sinclair Broadcast Group, which has been cashing in on a series of agency moves that are easing restrictions on its control of local television stations. In a 12-page letter sent to Republican FCC Chairman Ajit Pai on Aug 14, Reps Frank Pallone Jr. (D-NJ), Mike Doyle (D-PA) and Diana DeGette (D-CO) seized on multiple media reports detailing how the agency has been delivering on Sinclair’s deregulatory wish list. “We hope this letter will serve as an opportunity to respond to reports suggesting you have failed to exercise adequate independence as FCC Chairman and that may have resulted in the agency giving unusual and possibly preferential treatment to Sinclair," the three Democrats wrote. They asked Pai to come forward with more information about his office’s contacts with the White House and Sinclair on proceedings related to the broadcaster. They want any correspondence between Pai's office and Sinclair, including any lobbyists or lawyers, and whether Sinclair requested a short time frame.

[Commentary] Today, US technology companies adhere to a wide array of requirements from repressive governments that undermine Internet freedom and privacy. These demands violate international law, including the right to freedom of expression. But the enormous benefits of market access outweigh the relatively low costs associated with accepting repressive governments’ demands.

Undoubtedly, there are circumstances in which requests for information or access to accounts are reasonable, such as when investigating terrorism and major crimes. But the misuse and abuse of this power by authoritarian governments are routine. Unless the U.S. government stands in support of companies that refuse to comply with wrongful requirements, authoritarian regimes will feel emboldened to make ever-increasing and unreasonable demands. And while U.S. technology companies should be able to invest in Internet-restricting countries, if their choices directly facilitate the persecution of these governments’ political opponents, then they should bear the costs.

[Jared Genser is an international human rights lawyer based in Washington.]

America's largely romantic view of its giant tech companies — Facebook, Google, Apple, Amazon, etc. —is turning abruptly into harsh scrutiny. Silicon Valley suddenly faces a much more intrusive hand from Washington, based on rapidly accumulating vulnerabilities. Today's conditions — populist rage in the country, combined with growing suspicion of corporate behemoths — closely mirror those that gave us Teddy Roosevelt's trust-busting of oil and steel at the turn of the 1900s, and the progressive reforms that ushered in today's antitrust protections.

When I showed a draft of this item to my tech colleagues at Axios, they pointed out that many of the giants have been trying to recalibrate their Washington operations for the Trump era: Facebook hired a former top Senate aide to Attorney General Jeff Sessions. Google, with long Democratic ties, did "an about-face" to woo Republicans after the election. Amazon hired a lobbyist with close Trump ties, Brian Ballard. A key executive at one of the targeted companies told me: "It's the attitude and the mood of the country, underscored by the election. It's hit in so many different directions, including the institutions of news and the institutions of higher learning."

It’s not easy being the first and only Fox News host in Silicon Valley. But Steve Hilton, a tech entrepreneur who was once chief adviser to former Prime Minister David Cameron of Britain, added that role to his résumé in June. Now every week, Hilton flies from the home he shares with his high-profile tech executive wife, Rachel Whetstone, in Silicon Valley’s billionaire enclave of Atherton (CA) to Fox’s studios in Los Angeles to host “The Next Revolution With Steve Hilton.” Fox News markets the Sunday night program as exploring “the impact of the populist movement.” All of which makes life complicated for Hilton in overwhelmingly liberal Silicon Valley, where supporters of President Trump are nearly nonexistent and few think populism would improve their lives.

The day before President Trump’s inauguration, the top executive of the Sinclair Broadcast Group, the nation’s largest owner of television stations, invited an important guest to the headquarters of the company’s Washington-area ABC affiliate. The trip was, in the parlance of the business world, a deal closer.

The invitation from David D. Smith, the chairman of Sinclair, went to Ajit Pai, a commissioner on the Federal Communications Commission who was about to be named the broadcast industry’s chief regulator. Smith wanted Commissioner Pai to ease up on efforts under President Barack Obama to crack down on media consolidation, which were threatening Sinclair’s ambitions to grow even bigger. Smith did not have to wait long. Within days of their meeting, Commissioner Pai was named chairman of the FCC. And during his first 10 days on the job, he relaxed a restriction on television stations’ sharing of advertising revenue and other resources — the exact topic that Pai discussed with Smith and one of his business partners, according to records examined by The New York Times. It was only the beginning. Since becoming chairman in January, Pai has undertaken a deregulatory blitz, enacting or proposing a wish list of fundamental policy changes advocated by Smith and his company. Hundreds of pages of emails and other documents obtained under the Freedom of Information Act reveal a rush of regulatory actions has been carefully aligned with Sinclair’s business objectives.

Months before social-media company Snap publicly disclosed slowing user growth, rival Facebook already knew.

Late in 2016, Facebook employees used an internal database of a sampling of mobile users’ activity to observe that usage of Snap’s flagship app, Snapchat, wasn’t growing as quickly as before. They saw that the shift occurred after Facebook’s Instagram app launched Stories, a near-replica of a Snapchat feature of the same name. Facebook’s early insight came thanks to its 2013 acquisition of Israeli mobile-analytics company Onavo, which distributes a data-security app that has been downloaded by millions of users. Data from Onavo’s app has been crucial to helping Facebook track rivals and scope out new product categories.

Apparently, Federal Communications Commission Chairman Ajit Pai is working on a media ownership order that would allow newspaper-broadcast and radio-TV cross-ownership. The item also could remove the prohibition on owning two of the top four-rated stations in a market, and "tweak" the eight-voices test for allowing duopolies (two stations in a market owned by a single entity). Currently newspaper-TV and radio-TV combinations cannot be co-owned in the same market, with the exception of some grandfathered combos. The duopoly restrictions currently prohibit common ownership of two TV stations in a market if it would result in fewer than eight independent outlets, which means no station co-ownership in smaller markets. Reducing the number of independent voices (stations) in a market would expand the number of markets where dual ownership would be allowed.

The item is not expected to deal with the UHF discount or 39 percent national station ownership cap, apparently. While it initially looked like it could be circulated to the other commissioners for a vote at the Sept 28 meeting, that timeline would likely be pushed to at least October.

[Commentary] The Federal Communications Commission has before it the question of Sinclair Broadcast Group’s $3.9 billion proposed acquisition of Tribune Media. It is a major decision, since the resulting broadcast behemoth would hold as many as 233 local television stations reaching into more than 70 percent of American homes.

Allegations about the Trump administration’s closeness to Sinclair – including Jared Kushner’s campaign deal – have been made. All I know is what I read, but the lead up to the actual decision has been significant and seems to presage approval. The statutory test for the FCC’s decision – and the only test Congress has instructed the commission to use – is whether the merger is in the “public interest.” The corporate interest of Sinclair is obvious; they may be a politically friendly company, but whether they meet the public interest test is now even being challenged by others of the same political stripe. Not to be lost in the decisionmaking is the statutory rationale behind broadcast licenses in the first place. In the belief that broadcasting is a public trust, broadcast companies have been given use of the public’s airwaves. The key to that public trust is providing news and information to the local community of license, a concept that appears in danger by the one-two punch of the FCC’s elimination of the local studio requirement and the national network designs of Sinclair. Ultimately, the decision comes down to the record in the proceeding. The richness of the record on this matter would suggest that even though the Trump FCC has bent the rules to facilitate such a merger, it is not in the public interest.

Republican Reps are seeking to eliminate the Federal Communications Commission’s newspaper and broadcast cross-ownership rule through draft legislation reauthorizing the federal agency. The 1975 rule bars media companies from owning and operating newspapers and TV stations in the same local market. The FCC reauthorization draft bill that was discussed during a House Commerce subcommittee oversight hearing on July 25 includes a section called “elimination of daily newspaper cross-ownership rule.”

Democratic Reps are reportedly largely opposed to eliminating the rule. “Committee Democrats will not support any efforts to eliminate the broadcast and newspaper cross-ownership rule,” a Democratic aide said. “We should not be making it more difficult for independent voices in the media to thrive, especially as the Trump administration continues its misguided attacks on the free press.”

Senate lawmakers are also planning on releasing an FCC reauthorization bill before the end of 2017. Senate Commerce Committee Chairman John Thune (R-SD) said after a panel executive session on Aug 2 that FCC reauthorization will be one of the first things that the committee addresses when lawmakers return from the August recess. It is unclear if the committee’s legislation will also include a provision eliminating the media cross-ownership rule as part of the agency’s reauthorization.