AT&T/BellSouth & Cisco: Business Partners in the Marketplace and at the FCC

The FCC’s General Counsel has quoted from a letter Cisco sent urging the FCC to swifly act on the AT&T-BellSouth mega broadband merger. The Counsel just gave FCC Commissioner Robert McDowell permission to participate in the proceeding (to his credit, McDowell recognizes there is a conflict of interest). But Cisco’s plea is mere special interest lobbying for its “strategic” business partner-AT&T. Also see these links. FCC Counsel Feder should have acknowledged such ties when he quoted from the Cisco letter (as well as with the BellSouth/Cisco connection). It’s another illustration why the FCC needs a thorough ethical house cleaning. The agency requires an in-house watchdog whose duty is to the public–and not the corporate interests the FCC is intended to oversee. The public deserves to be protected by the appointment of an independent ombudsperson whose duties would be to represent the interest of the average consumer. One of the first reports that should be made is a list of the “revolving door” personnel between the media and telecom industry and FCC. It is shameful that so many FCC chairs, commissioners and senior staff seek employment from the very interests they govern. Role models are Gloria Tristani and Nick Johnson, who pursued non-profit and education work after their terms of office. The golden revolving door list should be made very public.

The Adelphia Cable and Bank Settlement: Illustrating the Big Media/Telecom/Banking Nexus

Even though investment banks knew that former Adelphia exec’s–primarily the Rigas family–were using the cable giant as a personal “ATM machine”–they kept lending it money. Now, 39 banks (and the Deloitte & Touche auditing firm) have settled a bankruptcy-related lawsuit with investors–to the tune of $455 million. Neither the banks nor Deloitte admitted wrongdoing. But Citigroup, JPMorganChase, Wachovia, Bank of America and so many others have agreed to pay. The settlement, btw, is just a fraction of what investors say they lost from the cable industry shenanigans of the former Adelphia management. But so eager to make transaction fees and so sure that Adelphia’s cable subscribers would ultimately have to foot any red-ink, the banks kept lending and lending [according to the unsecured creditors complaint]. But we want to make a related point. Wall Street has helped fuel a conglomerated media and telecom culture–despite negative consequences to our democracy. Investment banks have too often operated in a self-serving and short-term focused manner when it comes to communications, We think it has had particularly negative consequences to both journalism and civic discourse. Reading the original complaint and related documents would be a perfect way to start thinking about what should be done to better protect the public.

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Follow the Data—N.Y.Times Overlooks

Today’s business story on Microsoft’s online business honcho Steve Berkowitz over-looked a key critical dimension with what is really going on at that company. Microsoft is now focused on interactive advertising–and data collection–as a primary source of revenue. Microsoft has turned every bit of itself into a system that serves the needs of its adCenter [Microsoft Digital Advertising Solutions]. As we explained recently in a complaint to the Federal Trade Commission, Microsoft’s bundling of search, rich media, user-generated content (blogs, videos), email, instant messenger, etc. to help collect the data used for advertising microtargeting is on the cutting-edge of what threatens consumer privacy, in the U.S. and everywhere else.

We hope that the news media will look closely at its own operations as its relates to interactive marketing and privacy. Everyone, including the New York Times, is engaged in interactive data collection and ad schemes that threaten our privacy. Perhaps if business reporters, editorial boards, and executive producers were willing to cast a critical eye at themselves in this regard, we would have business stories that got to the core of what is driving e-commerce today.

“Looking for a Gambit To Win at Google’s Game.” Saul Hansell, NYT. 12/9/06

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Time for a Bold Public Interest Media/Telecom Agenda

We hope readers will look at Matt Stoller’s blog and his important piece entitled “On Building a Progressive Governing Coalition Around Net Neutrality.” It should be a part of a much larger debate about what should be done—at this critical juncture with our digital media system—to ensure that it truly serves democracy. We believe that there now must be a major push—in Congress and the marketplace–to advance a comprehensive agenda that will:

• require broadband content non-discrimination;
• invest in digital content services designed to foster news and public affairs;
• invest and support digital media services owned by women, persons of color, and low-income Americans;
• “save” newspaper journalism through changes in tax laws, SEC rules, and via new policies encouraging employee and non-profit ownership;
• expand “universal service” so that everyone who cannot afford it receives free residential broadband service;
• open up Internet-connected cell phone/mobile platforms (the “deck”) and digital cable and satellite services to all broadband content (in other words, ensure network neutrality gets content wherever the Net is—not just on PC’s);
• foster the development of financially sustainable and diverse Web 2.0 social networks which build communities of interest that can help organize for a more equitable society;
• enact privacy and interactive advertising safeguards so that we aren’t digitally “shadowed” online from marketers and government. This will also act as a check against the stealth machinery promoting consumption that has been placed throughout our digital environment. [We know more must be added to this draft digital media agenda].

In the next few months, it will be important for all the groups and individuals concerned about the U.S. media system to come together and foster a serious plan and strategy. One reason why some groups haven’t focused on the emerging threat to democracy in the digital era [such as the loss of broadband content and network non-discrimination due to cable/telco lobbying the Bush FCC] is that advocates [including myself] haven’t made the case well enough about what the alternative vision can be. It should be a broadband content system that truly reflects U.S. diversity—and strives to promote the artistic, cultural, political, and even spiritual aspects of a “Just” society. I envision such a system everywhere—a diverse “digiplex” of dedicated and inter-networked public interest Web 2.0 sites in cities, state capitals and nationally [connected, of course, to many like-minded global services]. It would offer a range of programming and community-connecting efforts on cell phones, digital TV, and PC’s that would help challenge the status quo. If such services now existed in the Gulf Coast region, for example, there would be more powerful voices offering video and other programming that holds the country and political leaders accountable for failing to effectively rebuild. It would be run by—and better represent—those Gulf Coast residents who today do not own any major media outlet (namely, most people). I believe that such services could also generate revenues that would help pay for the programming and organizing which must be done.

One approach to some of this is to propose federal legislation–the Community Digital Diversity and Civic Engagement Act–that would provide a portion of the necessary funds and the equitable access policies. It would build upon the good work already being done by community cable, low power radio, citizen journalists, newspaper unions and many others. It’s time, frankly, that policy advocates looked beyond broadcast ownership: a new world has already dawned. A number of my proposals require a marketplace intervention that would explore business models for sustainability, so there’s a role for public interest minded funders here. We will be turning more to this topic in the New Year. Let’s have a serious debate, build and embrace allies, and work as hard as we can to make the necessary changes.

PBS’s Latest Commercial Venture: PBS Blend. Even with caffeine, guaranteed to put you to sleep (like watching two back-to-back Newshour’s and Antique Roadshow combined!)

PBS has now partnered with a coffee company to create the “PBS Blend.” PBS should `smell the coffee’ and realize that such for-profit ventures threaten to undermine the rationale for taxpayer support. Securing more commercial alliances is a short sighted and short-term strategy for the so-called non-commercial network. It is inappropriate for PBS to engage in commercial ventures, something it increasingly is doing. Why should the public fund a TV network that is just another competitor to Starbucks? PBS should be working to strengthen its non-commercial capacity at this pivotal moment of transition to a fully interactive digital media environment. But the new PBS management is clearly stoked on a caffeine rush, and are blinded about the implications of their “let’s make another deal” approach to securing revenue.”

PS: We just learned that there is also an “NPR Vintage Collection” of wines. Both PBS and NPR need to develop a comprehensive plan regarding their future sustainability. Slowly stocking gourmet sections of markets isn’t going to do it! But what a combination. You need to drink lots of PBS Blend so you can drive home safely after imbibing too much NPR vino!

Bloggers Must Disclose Financial Deals

Today’s New York Times op-chart column reporting on bloggers who write about politics and have a financial relationship with some of their subjects is very disturbing [“New on the Web:Politics as Usual.” By K. Daniel Glover & Mike Essl]. All financial ties require prominent disclosure, at the very least. We hope that policymakers will swifly require such rules. But if bloggers are to be taken seriously as journalists and opinion-leaders, they must hold themselves up to a high standard. It’s bad enought that now many accept advertising. I assume that the bloggers listed in the column, as well as any others who are working for politicians, corporations or any other interest they write about will be forthcoming about their connections.
PS: I support this column via my salary from the Center. It’s true that I have supporters–but they are all grantmaking organizations who don’t have any formal positions regarding what I do or write about. And I would never consider taking money from someone and then cover them–writing online or off. That’s bad journalism–and disreputable blogging.

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CDT Works to Undermine the Public Interest in Broadband/ Allies with PFF

The Center for Democracy and Technology (CDT) has long served as part of the political support system for the telecom and media industries. While many view CDT as a privacy group, a great deal of what the organization does benefits its corporate supporters—which have been some of the biggest media and data collection companies in the country. They have included Axciom, Doubleclick, Time Warner, AT&T, Microsoft, Yahoo!, Google and Intel.

Now, CDT has joined forces with one of the key corporate funded groups that has been leading the charge against network neutrality: the Progress and Freedom Foundation. PFF, co-founded by Newt Gingrich, is also supported by numerous corporate media/telecom interests, including Murdoch’s News Corp. (Fox), AT&T, BellSouth, Comcast, Clear Channel, GE/NBC, Google and Microsoft.

Yesterday, the two groups jointly filed amicus briefs in federal courts supporting News Corp./Fox and NBC’s efforts to undermine the ability of the FCC to regulate communications. The TV networks are fighting the FCC’s recent decisions on broadcast indecency. But the CDT/PFF filing wasn’t only about over-turning the FCC’s foolhardy and inappropriate efforts on so-called indecent content. The message CDT and PFF gave to the courts was they should rein in any effort by the FCC to ensure that the public interest be served in the digital media era. The filing claims that convergence of various media, including the Internet, make any policy role for the FCC related to diversity of content a threat to free speech itself. A very convenient argument that must warm the hearts of both CDT’s and PFF’s corporate funders, because they are precisely the companies who wish to avoid having a public interest regulatory regime in broadband.

Missing from the brief is any discussion of the regulatory areas for broadband (including PC, mobile, and digital TV [IPTV] platforms) that will require federal policy, including a key role for the FCC. Among them, ensuring an open, non-discriminatory content distribution policy for the Internet—network neutrality. Other rules that will require FCC action in the broadband era include ensuring “free” and “equal” time for political speech; diversity of content ownership, including by women and persons of color; localism; public service; privacy; and advertising regulation. There will need to be ad safeguards, for example, protecting children from interactive marketing that promotes obesity as well as with prescription drug ads targeting seniors via immersive “one-to-one” media techniques.

CDT and PFF argue that the new media environment provides the public with greater choice, another reason they urge the courts to limit FCC authority. But what’s really happening with digital media is that we are facing a system where the “choices” are being meaningfully reduced by the market. Wherever the public goes, the forces of conglomerate media and advertising will confront them. Consider, for example, News Corp.‘s MySpace now running Fox programming. (It’s interestingly, by the way, that neither CDT nor PFF told the courts that they have a financial relationship with some of the interests involved in the indecency debate).

We have long opposed FCC efforts to “regulate” indecency, including being critical of FCC Commissioner Michael Copps (whom we otherwise strongly admire). The indecency effort by the FCC has helped let it become vulnerable to this attack by the media conglomerates, and their supporters, who have a longstanding political agenda aimed at sweeping away all regulation and safeguards. Fox, NBC, Viacom, Disney and the rest want a U.S. media system where they can own as many media outlets as they want, not have to do any public service, nor worry about regulators concerned about threats to privacy and interactive marketing abuses.

The emerging broadband era in the U.S. will see us face further consolidation of ownership of media outlets, including the Internet, as well as an increase in overall commercialization. The cry that Wall Street has for broadband is “monetization.” But our electronic media system must also serve democracy—not just the interests of those who want to make money. Civic participation, public interest civic media, and safeguards from content and services designed to manipulate us must be addressed. There is a role for the FCC in all this. (We shouldn’t throw-out as “bathwater” the potential of our broadband media to serve democracy and a role for the FCC because we are upset about it catering to zealous social conservatives who don’t like some programming).

Finally, shame on CDT for joining up with PFF. PFF is an opponent of the network neutrality policy for the Internet. It has also long opposed any meaningful role for the FCC. But, perhaps that’s the point. If PFF gets it way, its backers–and many of CDT’s–will be free to do as they please, regardless of the consequences to our democracy.

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Online Ad and Data Collection Watch

My group has launched a new project to keep the public better informed about the latest threats to our privacy. Click here to visit Online AdWatch. It will regularly highlight new developments in the interactive ad marketplace across the PC, mobile, and digital TV platforms. Send me your favorite examples of technologies, applications and market strategies that should be included.

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Why Didn’t LULAC’s Wilkes Disclose

Yesterday, LULAC’s Brent Wilkes wrote an op-ed in the San Jose Mercury News claiming that network neutrality safeguards “could inadvertently lead to a significant widening of the digital divide by slowing the penetration of advanced broadband technologies into Hispanic and other under-served minority communities.” Wilkes is the national executive director of the League of United Latin American Citizens.

Wilkes failed to disclose that LULAC has funding from both Comcast and AT&T, two of the biggest opponents of net neutrality. He should have told the editors about such a conflict of interest and had it prominently included in his op-ed. His position is bad public policy for those LULAC serves. Ironically, it is the very special interests Wilkes defends (Comcast, AT&T, etc.) that are opposed to meaningful policies that would deal with the digital divide. Network neutrality and universal broadband service for all go hand-in-hand. The LULAC board needs to examine its conflict of interest policy to make sure that whenever an official makes a statement, and there is funding from a related vested interest, it is publicly acknowledged.

See LULAC/Comcast release

See LULAC/AT&T Foundation release

From: 2007 LULAC National Legislative Awards Gala
2006 SPONSORS

DIAMOND
Ford Motor Company

PLATINUM
AT&T
Comcast Corporation
General Motors Corporation
Univision Communications Inc.
Verizon Communications Inc.
Yum! Brands Inc.

GOLD
American Airlines
Bell South
The Coca-Cola Company
Coors Brewing Company
Miller Brewing Company
PepsiCo, Inc.
The Procter & Gamble Company
Tyson Foods, Inc.

SILVER
AARP
Burger King Corporation
Exxon Mobil
Home Box Office
Nielsen Media Research
Shell Oil Company
State Farm Insurance Companies

BRONZE
Pfizer
Rolls-Royce Corporation

Data Collection, Interactive Marketing and Digital Redlining: Beware of those that want to “Screen” you out

We believe the rapidly evolving set of online technologies designed to track, profile and target us online, via PC and mobile networks, requires meaningful consumer protection safeguards. One emerging issue is how marketers, advertisers and others may use online tracking technologies, such as behavioral targeting, to “screen” out consumers they consider “undesirable.” In another words, engage in a form of digital redlining. Marketers are now discussing how to use the knowledge they have about each of us to avoid what they consider to be unprofitable customers (such as those that use coupons or demand lower prices). “Audience screening,” as marketers are calling some of their newer interactive ad techniques, permit companies to simply bypass marketing to consumers who don’t fit in to their view of what may be profitable. The CEO of Best Buy termed such customers “devils” [sub. may be required] in a 2004 Wall Street Journal story. As the president of one marketing firm just explained in his article “Using BT to Dodge the Undesirable,” [I]f we know a lot about our least profitable (or even unprofitable) customers, how long before we use that information to develop profiles that help us skip over the deal-seekers and tire kickers? …Conceivably, an online electronics retailer could profile its customers in a number of different ways to identify the devils. Logfile, site analytics and customer purchase history data could easily provide information on which customers repeatedly redeem coupons and promotional codes featured in deal-seeker newsletters like GotApex? or Fatwallet.com. We could also index profitability against purchase history for every customer in a retail database, or look to external resources to see where the devils might be coming from. A few relatively simple algorithms could easily limit exposure to unprofitable customers.”

Other technologies are also available to help companies screen us out. For example, the web marketing firm X 1’s “progressive optimization engine” [POE] enables companies to “make actionable decisions from massive amounts of complex interacting data…POE uses a wide variety of data (anonymous geo-demographic info, end-user behavior, client-provided customer data, third-party data, etc.) to profile end users and to track anonymously their online behavior and responsiveness.” As X 1’s CEO explained last summer, “If you combine the best attributes of behavioral targeting with a number of different technologies including progressive optimization and the more advanced audience profiling engines you can accomplish what we call audience screening. Audience screening allows the advertiser to identify the audience represented from an impression on a network or a portal and determine if that audience member is more or less likely to act in response to an advertisement than the general audience. If the audience member is regarded as highly desirable, then the ads are exposed. If the audience member is not deemed highly desirable, then they are not exposed to the ad and the next sequential audience member is evaluated for desirability and match to the potential customer base for the advertiser.”

So, you ask: what’s the harm? I just won’t see an ad and can go about my business online. But we all know it’s more complicated than that. As we are classified and as our profiles are shared online, too many people will know about us. They will know as well what others think they know about us—such as if we are considered a “devil.” Some of us may be allowed to see valuable editorial content—even important news—because we are considered a valuable demographic target. Whole classes of people could be placed on an undesirable list—think of those Americans struggling to just make it economically and can’t readily afford the e-commerce lifestyle. Decisions about online targeting and segmentation practices can’t be permitted to be solely in the hands of marketers and the ad lobby. There is a role for public policy—now. We hope State Attorney’s General, Congress, consumer advocates and the FTC will take notice.

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