Post Tech

Rebecca Arbogast, managing director of research at Stifel Nicholaus, says the regulatory review of a merger between Comcast and NBC Universal could stretch out to the fourth quarter of next year.

Much of the scrutiny is expected to revolve around programming carriage agreements as Comcast obtains valuable entertainment content from NBC's Universal studios -- broadcast programs such as the Jay Leno Show and Heroes, and network channels like USA, Bravo and MSNBC.

There will also be a number of tougher questions, such as how the proposed combination would impact the burgeoning market of online video.

"Comcast-NBCU would be on more sides of programming and carriage negotiations, potentially giving the partners added leverage to obtain favorable terms with other multichannel and content companies and to extend the cable model to the Internet," Arbogast said.

She said by acquiring NBC's 30 percent stake in Hulu.com, Comcast runs into concerns that it could prioritize its own video content over that of competitors. By doing so, it would "ensnare the deal in the broader network neutrality debate," she said.

Comcast has said its online content deals are non-exclusive, meaning the video programmers that contract to run their shows through Comcast's Fan Cast site, are not prohibited from striking similar deals with competitors.

As reported, the Federal Communications Commission and antitrust watchdogs at the Federal Trade Commission are likely to eventually approve the deal. But Arbogast said if competitors decide to follow the proposal with deals of their own, there is a risk that the FCC would block the marriage to prevent further media consolidation and threats to local journalism, tenants that the agency seems inclined to protect.

"Merger proponents would presumably argue that government should get out of the way of an inexorable industry trend, but at some point, we believe a wary Democratic administration could gag on growing media consolidation and move to block the first deal in order to set a firm precedent," Arbogast wrote in a research note.

According to The Walll Street Journal and other reports, the deal is being held up by negotiations for Vivendi to relinquish its stake in NBC Universal. That deal would have to be done before Comcast makes its bid for NBC.

Finally, Liberty Media Chairman John Malone weighed in on the prospective deal Monday on CNBC. He said one key to negotiations and the regulatory review is what to do with local broadcast affiliates (NBC owns 27 local broadcast stations). He said those stations aren't making money on their own but could be helped by the cable subscription model that would essentially subsidize their businesses.

He said it will be interesting to see what the affiliates ask for:

"What will the broadcast affiliates of NBC say they want to not fight this transaction," he said.

http://video.aol.co.uk/video-detail/faber-report-john-malone/2230197564

When President Obama told university students in Shanghai last week that he’s a “big supporter of non-censorship,” it took 27 minutes for one major Chinese portal to delete that part of his speech. After two-and-a-half hours, almost all portals in the nation took out the comments from news coverage.

Despite what appeared to be the Chinese government’s clampdown on the controversial issue of online censorship, an explosive exchange about Obama’s support for “open Internet use” surfaced on blogs and on Twitter.

“That is the optimistic part of the story,” said Andrew McLaughlin, the nation’s deputy technology officer, recounting the event.

In a telecom law conference last Thursday by the University of Nebraska-Lincoln law school, McLaughlin and Tim Wu, a law professor at Columbia University, talked about how an open Internet, or so-called net neutrality, underlies free speech on the Web. Without it, censorship can occur.

“If it bothers you that the China government does it, it should bother you when your cable company does it,” McLaughlin said.

The two technology-policy experts talked on the panel, moderated by Post Tech, about the balance of promoting U.S. beliefs in free speech and open-Internet policies while also respecting the political and cultural norms of other nations. McLaughlin ran global policy (non-U.S. policy) for Google out of the San Francisco Bay Area before joining the administration earlier this year.

The tricky thing about the Internet is that because of the architecture of the Web that gives access providers -- either a government or telecom/cable company -- control over Web content, those entities have an outsized influence over the flow of information.

“Optimistic view is that censorship is the last-ditch, last-gasp effort by
centralized regimes to control what you do,” said McLaughlin, the former head of policy for Google. “The pessimistic view of the Internet is that it is basically a tool for perfect control.”

Bringing that back to the United States, the Obama administration views free speech and net neutrality as “intrinsically linked,” he said. The U.S. has a long-held belief that free speech is a national core value, even more so than most nations, he said. And key to that is ensuring that the corporations giving users access to the Web don’t act as gatekeepers of information and speech.

The FCC is in the middle of shaping new rules for Internet access that would prevent a service provider such as Verizon, AT&T or Comcast from blocking or prioritizing any legal content on the Web. McLaughlin said FCC Chairman Julius Genachowski's push for new rules supports the adminsitration’s views on freedom of expression and innovation.

“In this country our commitment to Internet freedom is so strong that we not only have a First Amendment that restricts the government from restraining free speech, but we also think that companies that provide access turn into speech regulators themselves,” McLaughlin said.

“That's how I think about the issue because of the peculiar nature of access providers to ride off of scarcity in connectivity and long-term contracts with customers. Because of that control, they are in a position to potentially favor one competitor or speaker than another.”

So why should the U.S. care if other nations disagree?

Mclaughlin said the reasons are in part tactical. Countries that agree with U.S. principles of free exchange of ideas and free economics and markets are aligned with U.S. strategic objectives, he said.

That becomes trickier when allies like Germany and South Korea pursue divergent policies on free speech. To post a comment on an online forum or blog in South Korea, for instance, a resident has to identify himself or herself through an authentication process that requires a name and national identification number. In Germany, it is illegal to express allegiance to the Nazi party or to express hate language toward Jews online.

“You'd have an armed revolt in this country if you tried to do that,” McLaughlin said. “In Germany, they have a unique historical experience and set of democratic institutions that have repeatedly over decades validated that certain kinds of speech are off limits.”

Wu advocates for free speech but also cautions that the government treads a fine line between exporting its values and respecting those of other nations. In the late 1990s, protesters in Seattle demonstrated at a World Trade Organization ministerial meeting against what they thought were flaws of globalization. Now, Wu said, there runs the risk that multinationals of the Internet economy – such as Google – are spreading their cultural norms around the globe.

“In the 1990s, there were some who were afraid that the world was becoming too simple and a single culture,” Wu said. “Now you have people in countries who tend to dislike Google, for example, because they are creating a sense of uniformity by saying what counts as important on the Web because of their algorithm.”

(Photo credit: Harvard Law School)

CORRECTION: AT&T's Cicconi met with FCC Chairman Julius Genachowski's chief of staff, Edward Lazarus. Genachowski was not in the meeting.

It's been a few weeks since Google told the Federal Communcations Commission that its voice application is still blocking calls, just fewer of them.

So what does the FCC plan to do? That's what AT&T wants to know and the company sent its top lobbyists to the agency this week to talk to Edward Lazarus, chief of staff to FCC Chairman Julius Genachowski about the apparent violation of phone calling rules.

At the meeting, Cicconi also reiterated several objections from AT&T to an agency proposal for net neutrality rules that would prohibit the discrimination of content over the Web. (Here's a letter submitted to the FCC describing the meeting).

Specifically, Cicconi said one portion of the proposed open-Internet rules was too strict.

By "imposing a non-discrimination standard that does not contain some form of reasonableness limitation would be more restrictive than the prohibition against “unreasonable discrimination” adopted for monopoly-era telephone companies in the Communications Act of 1934.

And in a meeting with FCC chief counsel Bruce Gottlieb, AT&T's senior vice president of federal affairs Robert Quinn asked "that the commission make clear that Google is prohibited from blocking voice calls irrespective of the underlying technology used to deliver its service.

An FCC spokesperson was not immediately available to comment on the meeting nor on the agency's response to AT&T.

The FCC has been investigating practices of Google Voice, an Internet application that forwards calls and aggregates phone numbers for users. AT&T had complained to the agency that Google had been violating communications regulations that prohibit call blocking. On October 28, Google said it has reduce the number of calls it blocks to under 100.

Hollywood urged key lawmakers Thursday to support trade negotiations that would set rules for policing copyright laws.

The Motion Picture Association of America wrote a letter to several lawmakers including Senate Judiciary Committee Chairman Patrick Leahy (D-Va.) and House Commerce Committee Chairman Henry Waxman, asking them to support the Obama administration's efforts in the trade talks, which are being conducted behind closed doors in Seoul. Other countries participating in the negotiations include the United States, Canada, Japan and South Korea, along with European Union members.

In its letter, the MPAA said that new global rules are needed to protect films from Internet piracy. As more people illegally trade content online, the movie studios businesses suffer.

"The ability to finance, create and distribute entertainment, and the livelihood of the talented and dedicated men and women who work in our industry are dependent upon our ability to protect the intellectual property that is the lifeblood of our industry," wrote MPAA Chairman Dan Glickman. "Technological advances have enabled more copyrighted works to be disseminated to more people in more countries through more media than ever before."

The appeal comes amid protests of the trade talks by public interest groups and legal scholars, who say such negotiations shouldn't take place in secret. The countries are crafting a set of rules known as the Anti-Counterfeiting Trade Agreement, which would address, among other things, illegal distribution of copyrighted material over the Web.

As reported, sources who have seen drafts of the trade agreement have expressed concern that rules under consideration are too stringent and could lead to Internet service providers filtering content. If the ISPs fail to stop copyright infringements by their subscribers, those ISPs could be held be held liable by the movie, music and publishing industries, according to sources.

Glickman called the protests a "distraction" and said that they flout efforts to deal with a need to figure out how to enforce online copyright.

"Opponents of ACTA are either indifferent to this situation, or actively hostile toward efforts to improve copyright enforcement worldwide," Glickman said.

Similar letters were sent to:
Ranking Member Jeff Sessions, Senate Judiciary Committee
Chairman Max Baucus, Senate Finance Committee
Ranking Member Charles E. Grassley, Senate Finance Committee
Chairman John Conyers, House Committee of the Judiciary
Ranking Member Lamar Smith, House Committee on the Judiciary
Chairman Charles Rangel, House Committee on Ways and Means
Ranking Member Dave Camp, House Committee on Ways and Means
Chairman Henry Waxman, House Committee on Energy and Commerce
Ranking Member Joe Barton, House Committee on Energy and Commerce

A federal judge late Thursday granted preliminary approval to a revised settlement between Google and two authors and publishers groups over the Internet giant's effort to create a vast digital library.

U.S. District Court Judge Denny Chin, of the Southern District of New York, said he will hold a hearing Feb. 18 on the new settlement, which would give Google access to scan and print millions of out-of-print titles protected under copyright.

The first settlement reached between the parties in 2008 was criticized by the Justice Department, online commerce competitors, library groups and the Internet Archive.

In response to those criticisms, the parties have revised their agreement, but critics say the new deal still falls short of protecting competition among book resellers and doesn't adequately address copyright concerns, particularly over orphan works -- titles whose authors can't be found or are unknown.

The Justice Department and the public will have until Feb. 4 to comment on the new settlement.

Liberty Media Chairman John Malone says Comcast's plan to buy NBC Universalcould prompt competitors to explore their own tie-ups.

In an interview with the Associated Press, Malone said a combined Comcast and NBC Universal would have too much market power and would force competitors to "look pretty hard on how they can protect themselves from the kind of market power that that would represent."

Malone is chairman of Liberty Media Corp., which controls satellite TV provider DirecTV Group Inc. NBC Universal includes broadcast and cable channels, film studios and theme parks.

In just one year, the hottest cell phones went from the flip Motorola Razor to mobile computers like the iPhone. Lightening-fast innovations are taking place throughout technology, except for one area: the television.

That was a concern voiced by officials at the Federal Communications Commission yesterday, who identified a lack of competition and innovation in the television set-top-box market as a key hurdle to the adoption of broadband Internet.

In its charge to blanket the country with affordable Internet access, the FCC is looking broadly at problems throughout the communications industry. It's already upsetting telecom and cable companies whose businesses are being scrutinized as it reviews a federal fund for phone service and the potential use of broadcast spectrum for mobile Internet use.

Yesterday, they got under the skin of the cable and satellite industries with a critique of their use of set top boxes, which the agency said are not embracing the convergence of online video with regular old television models.

Please take a look at this post from yesterday on the FCC's take on set-top-boxes. In it, FCC Chairman Julius Genachowski talks about how nearly every home in America has a television, which is an opportunity if that box in the living room were also used for broadband Internet access.

Kyle McSlarrow, CEO of trade group National Cable and Telecommunications Association, said in a statement that the manufacturers making those boxes are to blame.

"Our industry continues to support and encourage consumer electronics makers to produce TVs and other devices that allow consumers to access the Internet," McSlarrow said. "Moreover, we were the first in the industry to publicly propose that consumers should be able to access the video offerings of cable, telco and satellite providers with any device purchased at retail. Such a solution would spur the kind of innovation at retail that we and the commission believe would meet consumer demand. In that regard, we welcome the opportunity to explore repealing the counterproductive rule that requires a cable card to be inserted in all leased set-top boxes which impose unnecessary costs on consumers."

Marvin Ammori, a professor of law at the University of Nebraska at Lincoln and adviser to public interest group Free Press, disagrees.

He said cable and satellite companies lease the majority of boxes to its customers -- the FCC said the same thing in its presentation yesterday -- so to say there is choice at retail doesn't address the fact that most consumers find it convenient to take the box provided by their service provider.

The FCC said there are only about 14 set top boxes available today either through service operators or at retail, compared to hundreds of mobile devices. The FCC has said applications and content will be a large driver of broadband adoption, and public interest groups say the set top box is being held back from the same applications and content boom taking place on wireless phones.

"Because the cable industry has controlled the cable set top box, it's hard to create a device like Boxee that can incorporate in one interface, online TV and Cable TV," Ammori said. "The idea for the cable industry is that they want everyone to go to their channel box and the platform they control because if content were to be available online in the way consumers want, they would cut their cable subscription."

He said the cable set top box should be viewed in the same way as AT&T's old black phone, which it leased to consumers as the sole choice for users until Carterfone rules opened up phone lines to other devices like the fax machine.

There's no reason why the set-top-box can't be a slimmed down device with lots of applications, akin to the iPhone. Users could access whatever content they want through any device, without having to be strapped to a particular cable or satellite carrier for certain shows. And they could choose from scores of applications for what shows they want to watch and use the television in the same way they use their home computers to research and browse the Web.

Brian Dietz, a spokesman for NCTA, said his industry is competitive. He said consumers have many options to choose from -- cable, satellite and telecommunications service providers. They can get subscription services like Hulu, iTunes and Netflix for online streaming video.

He said Ammori's argument is "akin to saying you can't go into Target and purchase products that are only sold at Walmart. The type of packages, different channels and services is what differentiates providers."

What worries cable and online video companies most about the expected merger between Comcast and NBC Universal?

They say the combined entertainment giant would have too much control over a wide body of content. And it could make it difficult for competitors to offer NBC broadcast and cable shows and Universal movies in the same way Comcast subscribers would receive it.

RCN, a smaller cable operator based in Herndon, Va., says a merger between Comcast and NBC Universal would be "bad for competition and therefore bad for consumers."

The company said it fears that such an entertainment goliath could hurt smaller cable competitors who already struggle getting good programming to their consumers. Even with federal rules that ensure choice programming held by Comcast is available to competing cable operators, it says Comcast doesn't always do so easily.

"The rumored Comcast-NBC Unviersal merger would hugely expand Comcast's control over 'must have' cable programming and add a broadcast network to its empire. Existing program access rules, even as expanded by arbitration conditions imposed in prior mergers, have been largely ineffective in controlling the discriminatory impact of Comcast's existing vertical integration of content and distribution," Richard Ramlall, senior vice president of strategic & external affairs & programming for RCN, said in a statement.

He said the Federal Communications Commission and antitrust watchdogs at the Justice Department or Federal Trade Commission need to look at "the dangers of such an increased vertical integration" by combining the nation's largest cable programming distributor with a major producer the content.

As reported, the merger would face regulatory hurdles and would tread into new territory for some regulators becuase of the convergence of cable and online technology.

"Dangerous stuff happens when people who move content control the news. That’s when all worst things happen," said Tim Wu, a professor at the Columbia University School of Law who is writing a book that chronicles the history of media consolidation and how major mergers and partnerships between content creators and distributors hurt the public.

He points to the partnership between Western Union and the Associated Press in the late 1800s that led to a "two-headed monopoly" for news. It manipulated election results and favored companies in coverage.

RCN's comments echo those of satellite rival Dish Network CEO Charlie Ergen, who said last week:

"Obviously, we would have concerns with anybody who owns programming and ... distribution, particularly if they owned distribution in both broadband and cable. Programming access and broadband neutrality would be important issues there."

"We've purchased programming content from Comcast for a long time," Ergen said. "We're not treated fairly when it comes to the sports teams in Philadelphia. That ... has always smelled a little bit... So, there always have been some issues there."

In a previous post on Ergen's comments, Comcast spokeswoman Sena Fitzmaurice noted in an email that its carriage decisions over SportsNet Philadelphia abides by the 1992 Cable Act. The Federal Communications Commission has examined the issue twice at the request of satellite competitors and in both instances found that Comcast complied, she said.

Online video startups say the cable industry's TV Everywhere strategy offers a glimpse into how Comcast will treat its video content from the merger. Comcast's On Demand Online project, scheduled to launch next month, would give free online videos to its cable subscribers. So if you want to watch "Big Love" on your laptop, you will be able to watch some of those episodes for free as long as you are a Comcast cable subscriber.

Vuze, an online file sharing site, has warned that the merger could derail similar startups, which could essentially be starved of content. Other online video distributors are afraid to talk on the record, they tell me. They will need that valuable NBC content and if it's owned by Comcast, they don't want to burn bridges now by criticizing a deal that could marginalize their businesses, they say.

On Sen. Jay Rockefeller's (D-W.Va.) report about aggressive online marketing, reader "sbuck" reminds me to keep up my reader-friendly manners.

"I know you're a tech/biz blog rather than a consumer one, but the most helpful thing you could do is to post the names of the 450 sites that follow these tactics...Surely Rockefeller has such a list?"

Indeed he does. Though not with all 450 sites. Some of them were using those aggressive online marketing practices for such a short time that they weren't listed. But here is a link to exhibits in the report by the Senate Committee on Commerce, Science and Transportation that name nearly 90 of the Web sites involved. (Check out exhibits 3-5 for the list.)

Some companies on the list have issued statements recently saying they have changed their practices, but we can’t vouch for every Web site named by the committee.

TechNet, a bi-partisan political group of top Silicon Valley executives, named Rey Ramsey as its new chief executive.

Ramsey, chief executive of nonprofit One Economy, comes to the organization as the high-tech sector show greater interest in issues in Washington. TechNet's members include venture capitalist John Doerr of Kleiner Perkins Caufield and Byers, Intel chief executive Paul Otellini and Google chief executive Eric Schmidt. Ramsey will replace Lezlee Wistine, who left TechNet last may to join Personal Care Products Council.

"There is a growing importance of technology in our lives, an acknowledgement of what that means on the Hill in terms of legislation," Ramsey said in an interview. "I want to work with members of the organization to create bridges to other sectors --- the public sector, the nonprofit sector like the Urban League, and others who have a vested interest in jobs in their communities and a vested interest in education and the role of technology in education."

The Obama administration has pushed for new intitiaves in energy, healthcare and education that involve the use of broadband Internet and cloud computing. All these companies stand to gain business through such intitiatives -- from delivering the hardware to build new smart grids, to supplying the routers for new broadband networks and writing the software for cloud computing. At the same time, the administration is backing a net neutrality regulation proposed at the Federal Communications Commission that some of TechNet's members have criticized.

Ramsey co-founded One Economy, an organization that brings funding for technology solutions to bridge educational and social gaps in underserved communities. The group, which started out of a basement nine years ago now has an annual budget of more than $14 million with sponsorships from AT&T, Microsoft and other high-tech and telecom giants.

"Rey's spectacular work at One Economy has helped thousands of Americans gain greater economic opportunities through the power of technology," said Doerr, a co-founder of TechNet.

Ramsey will begin at TechNet, which is based in Washington at the start of 2010. He will continue to serve as chairman of One Economy.

The group is mixed on net neutrality, one of the most controversial issues debated in Washington. When asked if TechNet will support net neutrality rules being mulled at the FCC, he said the organization supports the overall spirit of an open-Internet but will wait to see the details in new rules before weighing in on the debate.
photo credit: One Economy