Archive for April, 2010

The Department of Commerce has announced that the first round of broadband grants has been fully awarded – 82 grants worth $1.2 billion touching 45 states.  I’m really excited about what they’ve accomplished.

Here’s a great grant – One Economy teaming up with a host of partners to put together $28.5 million in stimulus funding and $23 million in private-sector support to train people, support, deploy networks, and develop applications for people in low-income/affordable and public housing in more than 31 states.

We know that most of the broadband non-adopters in the US are low-income and people of color. But you can’t just bring in wires – you’ve got to show people that the Internet is relevant to their lieves.  One Economy proposes to train 2500 young people who can train 235,000 others; to bring wireless mesh networks to 159 public housing developments to connect 27K people; to expand applications to connect people to job, health, finance, and learning resources online.

This is quite a package, and One Economy will be measuring its effectiveness – it’s exciting.

YouTube made a deal to stream cricket and ended up as the top sports channel worldwide with about 50 million people from around the world watching.  (h/t Wilhelm)

Newteevee.com says that YouTube opened up the last few matches for live viewing in the US.

YouTube is taking on Netflix and iTunes, too – by renting videos for about .99-$3.99 for 48 hours’ watching.  You can pay via Google Checkout.

Worth watching.  Which model will YouTube follow?  A la carte online channels and a tussle to maintain net neutrality (so carriers don’t discriminate in favor of their own content), or bundling and deals with traditional distributors?  If sports are the shared US/global experience, and YouTube is a key distributor of sports, the direction YouTube takes will be significant for other, less-well-capitalized online distribution and creation platforms.

In “Inventing the Electronic Century,” Alfred Chandler lists antitrust actions that opened up the data processing, consumer electronics, and telecommunications fields to U.S. and other competitors. Chandler’s text is dry and factual (and he is inordinately fond of the word “epic”), but he gets his points across:

1.  Consent decree with IBM in 1956 mandates the licensing of “existing and future patents” to any “person making written application.”  As a result, all the peripherals and other hardware created during the development of the System 360 become available to all manufacturers.  Epic.  Clones produced in huge numbers.

2. Threat of another antitrust suit against IBM in 1969 prompts the company to unbundle its packaged software for the System 360 and 370.  Epic.  Huge revenues for software companies between 1968 and 1980.

3. Consent decree with AT&T in 1956 mandates that the company stay out of the computing business.

Epic.

The Los Angeles Times reports today that Hulu will start testing a monthly subscription service for access to some broadcast programming.  Because Hulu is the leading aggregator of long-form video online, this is a significant step.

Online video is still a nascent (but fast-growing) market.  For networks and TV stations, there’s great concern that online distribution will undermine their broadcast market – and their ability to sell advertising inventory and charge retransmission fees.  As a recent filing by Steve Wildman makes clear, broadcasters’ incentives when it comes to online video may be aligning with cable systems’ incentives:  Less is better.

So Hulu is under pressure:  online viewers want more, but media companies and cable companies (now merging) want control over the windows of distribution for their materials.  “The companies still want to control how, when and in what form their content is broadcast, and aren’t willing to risk traditional revenue sources for the relatively minor money earned through online ads, analysts say. “  (San Francisco Chronicle)

Wildman’s filing mentions the fact that rules that facilitate competitive video distributors’ access to cable programming (so-called “program access” rules) have encouraged competition in the video distribution marketplace.  Cable operators label these rules “forced sharing”.

And, Wildman says, during a call with FCC staff he “discussed the possibility, raised during the call, that a similar regime for online access to content could provide a similar incentive to online distributors of content.”

PC World has a sanguine view of all this: “Perhaps the Hulu Plus subscription is not that big of a deal after all. There are still plenty of places online to get free, high-quality TV, and either way, $10/month is a heck of a lot cheaper than cable!”

The FCC yesterday issued a Notice of Inquiry on “specific steps we can take to unleash competition in the retail market for smart, set-top video devices that are compatible with all multichannel video programming distributor services.”

Translation:  Why should the video distributor (your cable company or satellite service) control the market for devices that are capable of accessing video programming?

[Note: there is a heck of a lot of "unleashing" going on at the FCC.  Dalmations and Dobermans are leaping through the corridors.  Perhaps they'll hold a contest for another word at some point.]

The Commission admits that its efforts so far haven’t led to a functioning market in gateway devices, and isn’t convinced that the major cable operators will take steps that will prompt the creation of the commercial retail market that Congress asked for back in 1996.

The FCC is asserting that what’s needed is a standardization effort – something akin to the standard Ethernet interface that has allowed connection of innumerable consumer devices to high-speed Internet access networks.  Printers, game consoles, wireless routers, computers – they all connect to transmission lines via an Ethernet gateway or port.

So the Commission is suggesting the development of standardized adapters provided by the video distributors that would act as conduits between competitive devices and the network.  They’ve called for comments on the configuration of these adapters, what protocols they’ll use, and a host of other questions.

The idea is that this standardized adapter will lead to the development of many new consumer devices, allow people to link pay TV and online activity (chatting, searching, a huge variety of uses), and allow for innovation on both sides of the adapter without constraint.

I’ve written about this before, but I wanted to mark the moment when the Notice of Inquiry was unleashed.  It’s a big deal.

I know nothing about sports.

But I have heard that the shared American experience these days is watching sports events.

We don’t have widely-viewed broadcast programs (really – unless you count American Idol or Dancing with the Stars, and who would?) or universally-read newspapers.  We do have the Super Bowl, watched this year by 106.5 million viewers.  More people watched the Super Bowl than saw the final episode of MASH in February 1983. Major League Baseball games do better in terms of audience share than the top-ranked broadcast programs.

People choose their video distributor (cable or satellite) based on sports programming somewhere between 40% and 70% of the time.

So when a cable distributor is also the sports distributor, it can squelch competition.

Let’s take Comcast, for example.  It has ten regional sports networks serving many of the country’s most important metropolitan areas.  All of its RSNs are in areas where Comcast serves a significant portion of the area’s cable customers (Atlanta, Baltimore, Boston, Chicago, Denver, Houston, New York City, Philadelphia, Portland, Oregon, Sacramento, San Francisco, Salt Lake City, and Washington, DC.)  It has used its control over local sports programming to make life difficult for its competitors (Philadelphia, Portland, and Seattle coming soon).

According to the WSJ, in April 2009, Comcast’s COO, Steve Burke, said “Sports is the must-have programming on cable. One way that you can hedge yourself a bit is to get into it yourself.”  And in June 2009 Comcast’s Jeff Shell said that expanding Comcast’s sports content was the “top of our list over the next five years.”

If Comcast merges with NBC, it will be able to combine its many RSNs, and its Versus and Golf Channel cable networks, with NBCU’s broadcast-sports business and rights to major sports events, including a Super Bowl and two Olympic games.  Then it can put all of this material behind an authentication wall online, so that its subscribers can watch games when they’re away from their big TVs.  It’s not clear how program access rules apply to online sports events.  It IS clear that Comcast will have high-speed Internet access services that satellite providers won’t have.

Putting these operations together will make Comcast a threat to ESPN, and allow Comcast to squeeze Fox and CBS.  Comcast will have access to additional broadcast channels, and that will be attractive to college sports conferences and others who control rights to games and want distribution on multiple networks.  No one will be able to out-bid Comcast.

So – what’s the bottom line?  Just four steps: (1) everyone wants to watch sports, (2) every distributor needs access to sports in order to compete, (3) in the current framework, Comcast can make access to this programming expensive and bundled, so that other wired and satellite distributors can’t compete effectively, so (4) Comcast will have the ability to keep prices for sports subscriptions – and video services generally – high.

special HT to William Wilhelm for the shared experience

Google has released a government requests tool.  It’s highly illuminating and may end up being quite disruptive.  That’s what surprising data visualizations can do for us.

Google receives thousands of requests from governments around the world to provide user data, mostly relating to criminal cases.  It also receives many government requests to take material down from search results, ads, YouTube (non-copyright requests, because those would be coming from private parties), Blogger, etc.  Google didn’t include child pornography take-downs in these numbers, because it does that on its own.

The tool allows us to see the number of requests from different countries that Google received during the last six months of 2009.  More than 3600 data requests from Brazil during those six months and more than 3500 from the US.  But just 40 or so from Canada and 30 from Israel.

Germany asked for removal of material more than 180 times in six months – mostly having to do with court orders related to defamation claims, according to Google.  If you click on the country’s results, you’ll see what percentage of removal claims Google complied with during those six months.  For Germany, it’s pretty high – 94% taken down.  Germany also made more than 450 data requests.

At the moment, the data is pretty coarse-grained.  We don’t know how many data requests Google complied with.  We don’t know what the triggers were, precisely, for any of these requests.  We don’t know anything about China.  (Why?  Google says, essentially, “It’s complicated”:  “As noted in the map, Chinese officials consider censorship demands as state secrets, so we cannot disclose that information at this time. During the period that Google’s joint venture operated google.cn, its search results were subject to censorship pursuant to demands from government agencies responsible for Internet regulation.”)

But the numbers are surprisingly high.  Thousands upon thousands of requests for data about users?

Perhaps other companies will follow suit.  That would be extremely helpful.  It’s hard to know how meaningful the Google data is without any comparables.

From FT.com (ht Joe Kelly):

Neelie Kroes [EU telecommunications minister] said she would take action if companies such as Telefónica and France Telecom sought payments in exchange for carrying bandwith-guzzling services such as Google’s popular YouTube video-sharing website.

“Users should be able to access and distribute the content, services and applications they want,” she said in a speech in Paris.

And the carriers responded:

Lobbyists for telecoms groups said the matter was not settled. “We need to explain that this will reduce incentives for us to invest in much-needed networks,” said one.

Here’s a press release from Nathan James, the former OneWebDay executive director.

Nathan reports that OneWebDay has joined with the new Mozilla Drumbeat initiative to provide open web engagement opportunities 365 days a year.

Drumbeat is a valuable initiative – take a look.  We’re in an interesting and unique time for forwarding the idea of an open internet.  Drumbeat likes the OWD idea of supporting projects that help people take responsibility for the future of the internet.

Congratulations to the OWD board, led by Mitch Kapor, and to Nathan James.

Big news today – Judge Tatel has written the D.C. Circuit’s opinion in Comcast v. FCC, and Comcast wins.

Bottom line:  The FCC didn’t have regulatory authority over Comcast’s unreasonable network management practices because it failed to tie that authority to any express statutory delegation by Congress.

FCC can’t rely on Title I’s “necessary and proper” clause to give it jurisdiction over Comcast’s unreasonable network management practices, because this kind of “ancillary jurisdiction” has to be necessary to further its regulation of activities over which it DOES have express statutory authority. (Example:  the FCC 40 years ago went after cable to protect broadcast.  It didn’t have statutory authority over cable, but it did over broadcast – and the Supreme Court agreed that its exercise of power over cable was “reasonably ancillary” to its power over broadcast.)

FCC had said that the “necessary and proper” clause, by itself, gave it authority – but this claim has no particular limits.  If we believe that agencies act under delegated authority from Congress, there has to be some link in the FCC’s order to an express statutory delegation of authority.

Implications:  There are both narrow and broad stories to be told here.

Narrow:

The next time the FCC wants to issue an Order or otherwise exercise power over high-speed Internet access providers, it had better be very clear about the source of its power, and it can’t rely on just its “necessary and proper” clause in Title I.

Broad:

FCC’s arguments for its power over high-speed Internet access providers generally are now in jeopardy.  It can’t rely on Brand X as an affirmation of Title I authority, because the Court in that case simply deferred to the Commission’s regulatory classification of cable modem services.

FCC’s powers to impose consumer privacy protections on broadband providers or mandate the publication of cost information by them are now in jeopardy.  These key elements of the National Broadband Plan may not be enforceable under Title I, and attempts to carry out these portions of the plan are likely to be the subject of heated litigation.  Similarly, its nondiscrimination rulemaking is now in jeopardy, because that step depended on the same legal assertions that the DC Circuit found to be unpersuasive in today’s opinion.

Next steps:

The FCC will likely take a deep breath and consider its options.