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FCC overlooks the word proprietary

The Federal Communications Commission refers to customer data as “proprietary” in its privacy order set for vote this coming Thursday. Webster’s New World Dictionary defines proprietary as something belonging to an owner like a patent, trademark, or copyright. By placing the qualifier “proprietary” on customer data, the Commission gives the impression that the data is compiled by the consumer for possible placement into the stream of commerce and by transferring this data can receive something in return. Is the consumer doing this; getting something in return for putting her data out there?

The relationship between a consumer and her broadband internet access service is one where she provides certain personal information along with a network access fee to her broadband provider and in exchange receives access to the internet. An informed consumer is aware that sharing some personal data is part of her total cost for receiving access to the internet via her broadband provider. The best way to ensure privacy of her data is to not buy access service to begin with but public and social policy currently promotes universal deployment of and access to broadband so discouraging her purchase is not a policy option.

In my view, the consumer has created a negative externality by providing property, in this case her personal information, for free. The rate the consumer pays for broadband access overcompensates the service provider given the value the broadband service provider receives. What the Commission should encourage is a pricing regime where consumers can charge for the use of their proprietary information. This way, the prices paid for access provide a better reflection of what is actually being exchanged.

The Commission may find that with this market solution concerns of privacy will be abated as the consumer exercises more control over her market relationship with the broadband service provider. Allowing for consumers compensation for providing data may create a ripple effect in the internet eco-system. Go onto Facebook and you see consumers sharing a lot of personal information for free. Advocates for consumer empowerment should like this approach but these so called advocates would lose too much control of the consumer protection debate if consumers were to enjoy this type of market freedom over compensation for their data.

Bottom line, if the Commission is truly concerned about protecting proprietary consumer information, it should give the consumer the front line tools to protect her data and in a market system, that front line tool is the ability to be compensated for one’s property.

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Telling a media company to not buy content is like telling a car company to not buy tires

Earlier today The Wall Street Journal reported that AT&T may close on a deal to buy Time Warner. Time Warner (not to be confused with Time Warner Cable) is a content play with popular properties HBO, CNN, and Warner Bros. in its inventory. AT&T has seen the light flowing from convergence and is rapidly becoming a media company, an exciting move away from being just a broadband access provider.

The boo birds are out, providing the usual “this is bad juju” arguments against a merger should merger talks go just beyond speculation over the weekend. Michael Copps, former member of the Federal Communications Commission, reportedly refers to talks of merger as an action that would result in monopoly power, a power that is “incompatible with democracy.”

Last time I checked, democracy was simply about the masses having the ability to enter a ballot box and choose the lesser of two political evils.  Mr. Copps is conflating a supposed monopoly on content with freedom of expression. If there is a merger, freedom of expression and democracy would not be harmed. To use such arguments is like saying that a car company shouldn’t be allowed to buy a certain tire for its SUVs and refrain from marketing its SUVs as using such tires. AT&T is a media company and should be able to establish an inventory or library of content that reflects its brand. I would argue that it would be undemocratic to stop it from choosing the content that best expresses what type of media company AT&T wants to be,

Besides, there is no monopoly harm here. AT&T won’t get the most out of its content if it does not make it available to as many outlets as possible. Also, the merger doesn’t stop any other content producer or media company from producing and distributing their own branded content.

Content is near infinitesimal in its creation and distribution. This makes the argument of favoritism toward one’s own content ridiculous. What the favoritism argument really indicates that protesters don’t have the talent to compete on quality of content and could do us all a favor by sitting down and taking a chill.

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I don’t see how the FCC set top box policy adds value to content

On 27 October 2016 the Federal Communications Commission will take up the issue of competition in the navigation device or set top box space. The Commission wants to see the video content distribution industry move from requiring subscribers use of set top boxes to the use of free apps to find content. The main driver of the proposed policy, according to the Commission, is subscriber avoidance of onerous set top box fees that allegedly average $231 a year. With today’s app and internet technology, argues the Commission, subscribers should be able to find content without paying navigation device fees.

The process for getting to a decision is driving some content developers bonkers.  According to a report in Broadcasting & Cable, some content developers are concerned about the proposal’s lack of transparency and whether the Commission will play an intrusive oversight role in contracts between content distributors and content programmers.  Contracts lay out terms for compensation and channel placement, items I would think that the Commission should not really be interested in. Rather, the Commission should be interested in whether the telecommunications sector is bringing value to the overall economy. While content creation is ancillary to the sector, without information, data, or knowledge flowing over networks, the network itself loses value.

From the content programmer’s perspective, while concerned with carving out a niche in a competitive content space, the content developer, where he can seize the opportunity, wants to recover as much of a premium as he can from his product. That means cashing in on as much exclusivity as he can. He will do this in two ways. One, produce content that generates traction. Two, make sure that given the traction, he makes the content as exclusive as possible so that he can extract higher rents. Free apps do not meet either of these conditions. Free apps providing you navigation to licensed and unlicensed content eliminates exclusivity. Content competition is increased which drives down the prices content programmers can charge. This leads to lower returns on capital. If returns on capital are seen as too low, no investment is made, no infrastructure deployed, no workers hired.

All this to save $231 a year.

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Caribbean creatives can benefit from zero rating services

Posted October 13th, 2016 in Broadband, capital, content providers, data plans and tagged , , , by Alton Drew

As a native of the Caribbean, my attention has been turning toward global trade in telecommunications markets, primarily between the United States and the Caribbean. While I have a bias toward the English-speaking nations in the Eastern Caribbean having family in that sub-region, and I was born and raised in St.Thomas, it doesn’t mean that I don’t have love for the Spanish, French, and Dutch speaking islands. I just haven’t learned the languages yet. So, paciente, por favor.

Caribbean Export recently published an outlook on Caribbean trade in 2016 and 2017. It takes $500,000 to $2,000,000 for an artist to break into mainstream music markets. Population sizes on smaller island nations force Caribbean music artists to attempt expansion into North American, Asian, and European markets. The survey points out that online streaming is one approach used by artists to sell back catalogs and new music, with 25% of revenues accounted for online. According to Caribbean Export:

“The move to online consumption of music has some significant benefits for emerging artistes.  Online streaming and sales allow the artiste to understand what types of music and artistes are popular in which markets.  This can demonstrate which market may be most relevant for them to target with their music … The Information Technology revolution of the 1990s and the advent of social media have presented a wider reach to artistes today than has ever been possible.  In the age of the Internet, success is possible where an artiste with a quality product can inspire people to share their product, thereby creating millions of impressions. In other words, the sheer accessibility provided by the Internet means that an artiste can release content directly to a global audience, but it is important to stand out.”

The global Caribbean Diaspora numbers approximately 10.7 million with four million of those immigrants living in the United States. Mobile broadband, online streaming and social media can get an artist’s content in front of this audience quickly as discussed before. I believe what can also help is a free data approach combined with other strategic partnership initiatives. For example, where a carrier like Verizon can offer free access to a Caribbean artist website without a subscriber incurring a charge against their data cap, the consumer enjoys the benefit of exposure to new music which may lead to additional sales for the artist. The subscriber is also incentivized to explore other offerings via her smartphones, offerings she hopefully will be willing to pay for.

Another benefit from this type of global trade is the creation of demand for more infrastructure deployment. Increased content and new content delivery systems will need additional fixed line and wireless platforms to run on.

The Caribbean Diaspora should look at advocating for and investing in the development of online streaming for Caribbean artists as a type of remittance program. Greater support for these artists results in greater revenues eventually returning to our homelands with the benefits of infrastructure development both in the Caribbean and here in the United States.

 

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Could a Twitter-Disney combination help close the digital divide on content?

Posted September 26th, 2016 in Broadband, mobile telephone, sponsored data, Twitter and tagged , , , by Alton Drew

Bloomberg has been reporting for the past few hours that Disney has retained an adviser to help the entertainment company craft a bid for Twitter. As the markets go through pre-debate jitters and are currently on a down note, Twitter is up over one percent while Disney is moving in the other direction. Twitter, while among the big social media three that includes Facebook and LinkedIn, has been struggling to define itself and grow the number of subscribers.  Today’s news comes as no surprise to me and I’m happy a media company is making a play versus your run of the mill advertising company (although Salesforce allegedly is interested in the micro-blog.

Twitter picked up a little notoriety last week when it live streamed a NFL game. I enjoyed watching it via Twitter, especially given the quality of the video. Today’s news has me thinking how minority content producers could benefit from a Disney acquisition of Twitter. According to Pew Research, 27% of blacks that use social media use Twitter versus 21% of whites. Also, blacks and Latinos show a tendency to rely more heavily on their smartphones (12% and 13% respectively) than their white counterparts (4%).

While it’s too early to say what Disney would do with Twitter as part of its portfolio, I think such an acquisition would provide Disney with basically another channel for deploying content, especially niche content such as programming produced for minority cultures. Mobile carrier zero rating or free data services could augment such a strategy by providing cost free access to minority-produced content. Not only would it be less expensive for low-income minorities to access content, but members of other communities could be introduced to another culture’s content at a reduced financial cost.

Until then, first things first. A bid will have to be made. Stay tuned.