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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.

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Replace “telecommunications carrier” with “broadband access provider and voila, privacy rules

The Federal Communications Commission today issued some guidance on protection of consumer privacy.  Short of any specific privacy rules, the FCC will apply provisions of Section 222 of the Communications Act to providers of broadband access services.  In other words, substitute the term “telecommunications carrier” with the phrase, “broadband internet access service provider” and we will have a template for broadband access providers to follow when determining how to use consumer information that they collect either from consumers themselves or the other broadband access providers with which traffic, data, and private information are exchanged.

Which has me asking.  Just what type of consumer information do broadband providers collect and how do they use it? To provide an example of information collected and how it is used, I took a look at the privacy agreement provided by All Points Broadband, a broadband provider located in Loudon County, Virginia.  The company collects personal information including a subscriber’s name, billing address, credit card information, service address, and the nature of the devices used by the subscriber.

Personal information provided by the subscriber to the company may be combined with other personal data gleaned from the company’s Facebook page, the company’s affiliates, third party operators, market research firms, or credit reporting firms.  All Points also collects non-personal information such as the specific device identifier for a subscriber’s device, the browser being used by the subscriber, or the page requested during a subscriber search.

The company also collects information about the use of their network including the equipment used on the subscriber’s premises, time when the service is being used, the type of data being transmitted, the content received and transmitted by the subscriber, and the websites visited by the subscriber.

And just how is this data being used?  Network information is used by the company to monitor the performance of the company’s network.  The company, using network information, assesses how the subscriber uses the company’s services including the amount and type of data beineg received and transmitted.

Personal information may be used to send the subscriber marketing and advertising messages about the company’s servivces and website.  While disclosure of personal information to third parties is provided only with a subscriber’s consent, the company reserves the right to disclose non-personal information or any other information that the subscriber decides to make public.

In an era of big data, broadband companies are sitting on a treasure chest of information that can generate up to 10% economic value, depending on the quality of analytics, both from internal and external monetization points of view.

Could the FCC’s application of Section 222 to data collected by broadband providers threaten a provider’s revenues and profits?  My answer is yes.  For example, take Section 222(c)(1) of the Communications Act.  Under this section, broadband access providers receiving customer proprietary network information would only be able to use this network information in the provision of broadband services from which the information was derived or for service necessary for providing broadband servivces.

Broadband providers would have to make the argument that network information has a distinct meaning from personal  or run the risk of losing revenues from the acquisition and distribution of this data.  Should the FCC’s network neutrality rules survive court challenge, the agency should consider making a distinction in its rules between network information and personal information.

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Taking “toll free” to the 21st century level

If you want to see the true colors of net neutrality rule proponents look no further on their stances on zero rating.  A zero rated site is a site that a wireless carrier has exempted from its fee structure or data cap.  The company behind the site may have decided that exempting access to its site via its app may be good for attracting additional eyeballs which means more people viewing the ads that may be appearing on the site.  For a wireless carrier wanting to heat up the competition with other carriers, offering their subscribers data cap exemption when accessing popular websites like Facebook may help garner subscribers.

So far it looks like when 12 June 2015 rolls around and the Federal Communications Commission’s net neutrality rules kick in that the strategic partnership between mobile carriers and app developers in the form of zero rating may remain unharmed.  Carriers, according to published reports, are turning to zero rating because of the additional revenues that can be generated by advertisers.  And as I allued to earlier, app developers or advertisers are taking advantage of the traffic they can create by making it easy for consumers to avoid additional data charges when viewing their sites.

The FCC, in some deference to the net neutrality advocacy groups, will apply additional scrutiny to these arrangements because at the core of the net neutrality debate is whether content providers that bring better value, better marketing, or both, should be able to dominate a market against those content providers who are not able to market their content as valuable.  The FCC will, on a case-by-case basis, determine whether a consumer’s lawful access to internet content is being hindered by broadband access providers.

The “case-by-case” review will cause snarls on the way to product deployment and those delays will increase an app developers cost of deployment combined with lost ad revenues as the FCC makes up its mind as to whether a strategic partnership between app developers, advertisers, and broadband access providers violates net neutrality.  I believe that such arrangements even under the FCC’s net neutrality rule shouldn’t be viewed as violations.

First, there is apparently no blocking on the part of a broadband access provider pursuant to Section 8.5 of the FCC’s net neutrality rules.  The app providers are, by definition, edge providers and they are offering sponsorship of subscriber data as such.  Nothing in a zero rating scheme appears to prohibit any broadband access provider from visiting sites that compete with a zero rated site.

Second, zero rating a site is not the same as throttling according to Section 8.7 of the FCC’s rules.  Throttling is defined as impairing or degrading lawful internet traffic; slowing it down and negatively impacting the quality of the traffic’s flow.  Nothing in the definition of zero rating implies that a broadband provider would have to slow down traffic to site B in order to meet its zero rating promise to site A.  There would be no incentive since the company behind the app is reimbursing the broadband provider for revenues lost when exempting subscribers from data caps.

Finally, I wouldn’t equate zero rating with paid prioritization, and apparently not even net neutrality proponents are doing so.  Under Section 8.9 of the FCC’s net neutrality rules, paid prioritization sees a broadband access provider managing its network in order to favor one content provider’s traffic over another provider’s traffic in exchange for compensation.  In the case of zero rating, a content provider’s traffic is not being given any higher priority treatment.  Nothing in the definition of zero rating says that one provider’s traffic moves through a faster lane.  Neither can an argument be made that consumers are being disadvantaged.  On the contrary, the consumer benefits because they are accessing more content at a lower cost.

Zero rating is a win for consumers and content providers. The FCC, while expected to scrutinize these relationships, should not go overboard with oversight in this area.

 

 

 

http://www.npr.org/blogs/alltechconsidered/2015/02/25/388948293/what-net-neutrality-rules-could-mean-for-your-wireless-carrier

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An emerging Africa means America must deploy broadband quickly

Last week, President Barack Obama hosted fifty leaders from the African continent.  The United States is recognizing Africa as an emerging market.  According to an article in The Economist, Africa’s population will double by 2050 and it will be a young population.

This young population is also taking advantage of mobile technology where, for example, farmers are applying mobile telephone technology to connect them to weather and crop information that can hopefully lead to increased profits.

President Obama is correct in his assessment that the American economy is based on ideas and innovation and that ideas and innovation depend on development of human capital.  The African economy is going to need ideas and information in order to create knowledge that can be applied to problem solving, product creation, and service delivery.

Part of the reason why I was excited by Time Warner’s Howie Hodges’ presentation at the Congressional Black Caucus Leadership Institute conference a couple weeks ago was the result of him mentioning virtual data rooms.  Virtual data rooms or VDRs are replacing the physical data rooms that law firms and investment banks use to share and access information involving merger and acquisitions or bankruptcy proceedings.

According to Inc.com,  the virtual data room industry market, which was valued at $628 million in 2012, is expected to balloon to $1.2 trillion in 2017.   VDRs operate on the edge of the Internet and as repositories of digitized information, I see them playing an increasing role in global markets especially as trade between America and African countries increase.

An edge provider industry expected to grow this quickly should not be at risk of becoming collateral damage from Title II or common carrier regulation.  As these providers receive increasing requests to provide more services, they will have to respond not only to demand but to increasing competition.  They will have to be nimble.  They can’t run the risk of being forced to buy access services out of tariffs or wait for the FCC or a state regulator to approve new services or facilities because an advocacy group believes that strategic partnerships are taboo.

Africa’s emerging markets and their adoption of mobile broadband technologies for their agricultural and financial transaction markets signal the need for America to service the Continent’s needs for innovation and knowledge that only the American knowledge economy can provide.

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The FCC needs to practice spectrum supply neutrality

The Federal Communications Commission may like net neutrality for broadband providers but when it comes to its own gate-keeping rule, equal access to spectrum auctions is not the FCC’s cup-of-tea.  The Hill.com is reporting that a number of GOP congressmen have written the FCC to urge the regulator to take off the reins on AT&T and Verizon and allow them to bid on broadcaster spectrum without being foreclosed by a revenue floor.

“Under Wheeler’s plans, some companies — especially AT&T and Verizon — would be kept from bidding on certain blocks of airwaves in each market once that auction has reached a yet-to-be-determined revenue benchmark”, reports Kate Tummarello. “This is not how a market-based auction should function; it is how a cartel controls price.”

Cartel is probably the wrong phrase.  A cartel by definition is a group of firms with an explicit formal agreement to fix prices and output shares in a particular market.  There is no explicit agreement between the FCC, Sprint, and T-Mobile to fix any prices (I would hope).  Besides the FCC is not a firm and would not benefit financially from any price fixing, even if in the form of discounts to Sprint and T-Mobile; discounts because AT&T and Verizon would be locked out of offering a premium on top of any market price for the spectrum.

The FCC’s projected action would keep the market from searching for, identifying, and determining market signals and prices.

No, the FCC is a monopoly.  It controls the distribution of spectrum licenses, even those in the secondary markets since it must approve spectrum transfers.  While monopolists do sell the same product to different markets at different prices (think of the electric utilities that Susan Crawford is so fond of), they don’t restrict customers from entering a market.

What the FCC needs to practice is spectrum neutrality.  All wireless carriers get to show up and engage in the sale and the purchase of spectrum.   There is no logic to restricting access to an auction unless you simply want to the FCC to make the least amount of money for its efforts?