February 28, 2012
Rabbit ears, those icons of early television, are giving way to high-speed wireless Internet devices whose capabilities we now can only imagine. That's the promise, at least, of federal legislation passed last week to remake the nation's telecommunications infrastructure to meet the burgeoning demand from smart phones, tablets and other mobile devices for ever-faster connections. Achieving the promise, however, will require vigilance.
Why? Because the companies that control the largest part of the national mobile phone market, AT&T and Verizon, worked hard behind the scenes to create loopholes that would be of advantage to them. Because auctions of the public airwaves are one of the few ways Congress can generate revenues without raising taxes, legislators glommed onto the reauthorization of the Telecommunications Act to extend the payroll tax and long-term jobless benefits under the premise that proceeds from the sale of unused or inefficiently used portions of the broadband spectrum would help pay for those benefits. This complicated the already long-delayed legislation and allowed an amendment that sets limits on what the Federal Communications Commission can do to reclaim public airwaves from broadcasters. A more onerous amendment, which would have banned restrictions on the amount of spectrum that one company could control was modified, but not deleted, at the eleventh hour.
The Federal Communications Commission will organize auctions to buy some portions of the spectrum and sell others. This allows the FCC to convert the underused television spectrum for mobile Internet use. For some small TV stations broadcasting over the air in large media markets, the repackaged spectrum might become worth more than the TV station itself. In the past, spectrum auction proceeds went directly into the Treasury. These new auctions should generate from $20 billion to $30 billion after payments to broadcasters. Some $15 billion is marked to pay for the extended jobless benefits. There is $7 billion for a public safety network that would allow fire, police and others to communicate on a common channel. It is expected that several billion dollars will be paid out to broadcasters to give up frequencies. And $1.75 billion has been set aside specifically to reimburse television broadcasters who do not participate in the auction but have to change channels. Paying the broadcasters for airwaves the public owns is controversial, but it is undeniably a sweetener to transform our communications infrastructure more quickly.
How the auctions are run is crucial to ensuring that spectrum allocation benefits consumers, not just industry profits. Too few bidders could lower the sales price if the big players - AT&T and Verizon - appeared so unassailable that they scared away other bidders. The result: Consumers would be saddled with high-priced service controlled by a duopoly, and the Treasury would have less for its coffers.
It is now up to the FCC to sculpt this new media landscape through rule-making. Reed Hundt, the former FCC chairman, said: "It's a sad but true fact about this Congress that when they don't fatally injure something - like the broadband industry's future - we're all relieved." He said language inserted in the law at the last minute created an opportunity for good FCC lawyers to mitigate harm. But will the lawyers be vigilant enough? What's needed is cleanup legislation that more clearly champions consumers. That might need to wait until the next Congress. San Francisco Chronicle editorial
Cable giant Comcast announced the launch of the Web equivalent of a public access channel that the city (Houston, TX) and company say is among the first in the nation. Instead of straight broadcasts, the Web site allows for video on demand, the posting of viewer comments on videos and even the submission of viewer-produced footage.
Houston's Voice (http://houstonsvoice.com/) is what one spokeswoman called "A mix between YouTube, Facebook and Yelp." The Web site launched with about 40 approved programmers who will produce videos for the site, but anyone can apply for clearance to submit Houston-related videos to the site. The videos and comments are subject to screening by an editorial committee.
There's no advertising on the site. Comcast is launching Web sites in six cities nationwide as part of its commitment it to local programming offered to secure the Federal Communication Commission's approval of its purchase of a majority stake in NBC Universal last year. The FCC's list of conditions includes a voluntary commitment by Comcast to introduce new online and on-demand delivery of "public, educational and governmental programming." "You're going to see the city of Houston increasingly engaged in these kinds of pilot projects for innovative technology, innovative access to media," Mayor Annise Parker said in a news conference in the City Hall rotunda. "We are reaching out to the world saying we want to be on the cutting edge."
Parker said she sees the new Web site as a chance for Houston's diverse communities to talk to each other. The city's role in the partnership is primarily promotional, and the initiative will not cost any taxpayer money. Houston Chronicle
Time Warner Cable Inc. announced Monday the launch of a new Internet tier for residential customers. The Essentials plan is a 5-gigabyte allotment that can be combined with Lite, Basic and Standard services. New and existing customers can sign up for the service, which initially has been launched in San Antonio, Corpus Christi, Laredo and the Rio Grande Valley. Customers who opt for the service will get a $5 discount off their monthly service charge.
No overage fees will be charged during the first two billing cycles for Essentials users. After that period, there's an overage charge of $1 per 1 GB, up to $25. Unlimited customers will not be affected by the offer, and unlimited packages are still available. Customers can opt in and out of Essentials at any time, and all Time Warner Cable customers can monitor their data usage with the new usage tracker. San Antonio Express-News
AT&T Inc. said it is considering a way to let the providers of mobile services pay for the cost of the data traffic associated with things like streaming movies and smartphone applications, opening up a new round of debate over the rules of the mobile Internet. John Donovan, the executive responsible for AT&T's network and technology, explained the carrier's interest in the service in an interview, likening it to toll-free calling for the mobile-broadband world. "A feature that we're hoping to have out sometime next year is the equivalent of 800 numbers that would say, if you take this app, this app will come without any network usage," Mr. Donovan said on the sidelines of the Mobile World Congress, a mobile-industry conference, here.
Carriers have been considering different pricing models for years as they look for ways to make more money from skyrocketing mobile-data use. But AT&T's approach would be novel, an attempt to push some of the cost of data traffic back onto the Internet companies and other service providers that profit from it. It is far from clear how willing technology companies would be to pay wireless carriers for data use. Mr. Donovan said there was interest from companies that could use the feature to drum up new business from customers wary of using data-heavy services like mobile video. "What they're saying is, why don't we go create new revenue streams that don't exist today and find a way to split them," Mr. Donovan said of the technology companies.
The incentive-or cudgel-for technology companies to participate comes from AT&T and Verizon Wireless's shift from unlimited data plans to ones that charge users higher monthly fees as their data consumption goes up. A customer nearing his data limit for the month could be more likely to download a movie if the content provider covered the price of the data transmission. "It'd be like freight included," Mr. Donovan said.
Some consumer advocates reacted with dismay, arguing that AT&T could stifle competition and shift the playing field toward well-heeled app developers and content providers that have the financial capacity to subsidize mobile customers' data use. "You have to raise all this additional capital to reach the customer or alternatively you have to compete with well-established players who can afford to pay," said Harold Feld, legal director for consumer group Public Knowledge.
By allowing some companies to pay for better services for wireless customers, AT&T could be wading back into the "net neutrality" debate that played out in recent years. Proponents of net neutrality say that telecommunications companies shouldn't be allowed to give special treatment to some service providers, because doing so would threaten the ideal of the "open Web," where easy access to customers lets new competitors like Facebook Inc. spring up quickly.
Telecom companies say they need to have the flexibility to manage traffic on their networks. They also chafe at being sidelined as "dumb pipes," relegated to spending billions to maintain networks while Internet companies collect much of the profit from the traffic. Prepaid carrier MetroPCS Communications Inc. drew criticism from net-neutrality advocates last year after offering unlimited YouTube usage alongside its smartphone plans. The company no longer offers that plan, and a spokesman said YouTube never paid MetroPCS to subsidize data traffic.
The Federal Communications Commission has adopted "net neutrality" rules that are stricter for landline networks than mobile ones, and Public Knowledge said it would be tough to challenge AT&T's plan under the FCC's rules. Mr. Donovan, in the interview on Monday, said AT&T needed to find creative ways to deal with and profit from surging mobile-data use. "There's a view of an entitlement that says that any impediment to riding over the top of our network is inherently wrong, is un-American," Mr. Donovan said. The FCC declined to comment. Wall Street Journal
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