There will be almost 3 billion Internet users by the end of 2014, with almost two-thirds of users coming from the developing world, the International Telecommunications Union said Monday. There will be about 7 billion mobile subscriptions by the end of the year, including 3.6 billion from the Asia-Pacific region, the ITU said. There will also be about 2.3 billion mobile broadband subscriptions by the end of the year, the ITU said (http://bit.ly/1rWtHgw).
Effectively handling the transition to a “21st century digital economy” should be a “top priority for policymakers,” the Brookings Institution said in a research paper Friday (http://bit.ly/1mmatiS). With the explosive growth of video streaming, FCC leaders need to promote innovation that maximizes the benefits of new developments, said the paper, written by Darrell West, director-governance studies. “We need to make sure that populations such as the elderly, disabled, and those living in rural areas are able to reap the benefits of the technology revolution,” he wrote. “Having an infrastructure that supports innovation in commerce, health care, education, transportation, and energy makes it possible to bring the benefits of the technology revolution to a broad set of people.” Brookings Friday hosted a panel on how companies are dealing with new technology. (See separate report above in this issue.)
The FCC can’t use Section 706 of the Communications Act to pre-empt state laws prohibiting municipal broadband, Phoenix Center President Larry Spiwak said Thursday in a blog post (http://bit.ly/1miLam2). The agency plans to announce an approach by mid-May on how best to challenge bans on community broadband (CD April 29 p3). “Basic lawyering reveals three glaring infirmities” in the argument that Section 706 gives the FCC legal authority to pre-empt state laws, Spiwak said: First, Section 706 applies only to forbearance, not pre-emption -- and there’s a “big legal difference between the two concepts.” Second, Section 706’s forbearance authority relates to Section 10 of the Communications Act, Spiwak said, and “there is absolutely nothing in Section 10 which permits the FCC to preempt any state law or regulation.” It’s limited to the FCC exercising forbearance only over its own implementation of portions of the Communications Act, he said. Finally, the Verizon v. FCC case that struck down the agency’s net neutrality rules not only gives the agency power to oversee broadband ISPs, but also gives state public utility commissions “the same ability to regulate broadband service providers,” Spiwak said. “Let’s assume arguendo the FCC attempts to use Section 706 to preempt a state law restricting municipal broadband but the local state PUC (exercising the same authority) says ‘go to hell.’ Who wins? My money is on the state PUC: if the FCC can’t preempt using its direct authority under Section 253, then the chances of using its indirect authority under Section 706 are slim to none."
HBO’s deal providing Amazon’s Prime Instant Video exclusive streaming rights for select original series sets “a stake in the ground” for subscription video-on-demand (SVOD) agreements with premium channel suppliers, Starz CEO Christopher Albrecht said Thursday on an earnings call. The HBO/Amazon agreement, which starts May 21, covers HBO series, including The Sopranos and The Wire, which will be available to Amazon Prime customers at no additional charge to their membership fee. “It sets a precedent for monetizing programming on SVOD,” Albrecht said. The HBO pact is “good news” for Starz, which also pursued SVOD deals for its original series, including Spartacus, Black Sails, Magic City and The White Queen, Albrecht said. Meanwhile, Starz will feature 65 to 75 hours of original programming by 2018, partly funded by recent rate reductions it secured with Sony and Disney, company officials said. Starz expects to increase its original programming to 55 hours this year from 37 hours in 2013, as it launches new series, including rapper 50 Cent’s Power in July and The Outlander in August, analysts said. Starz’s Q1 net income improved to $64.9 million from $57.9 million a year earlier as revenue jumped to $420 million from $399.3 million. Programming networks and other service revenue increased to $363.3 million from $349.5 million, while home video net sales improved to $56.7 million from $49.8 million. Starz’s Q1 programming expenses rose to $156.2 million from $146 million a year ago, driving an increase in total costs to $306.5 million from $294.5 million, the company said.
Supreme Court justices spent much of Wednesday’s oral argument on Limelight Networks’ appeal of a patent infringement case brought by Akamai Technologies discussing whether their own ruling would have any real finality. The U.S. Court of Appeals for the Federal Circuit had ruled in favor of Akamai and the Massachusetts Institute of Technology (MIT) in August 2012. The appeals court said Akamai could argue that Limelight’s and its customers’ collective use of Akamai’s business method patent constituted “divided” or “inducing infringement,” meaning a company could infringe a patent by inducing a third party to take the final step that leads to infringement (CD Sept 4/12 p16). Limelight’s appeal of the case drew support from the Obama administration, along with technology companies like Cisco, which say the induced infringement argument would open them up to more lawsuits from patent assertion entities. The U.S. government believes the appeals court was wrong to find induced infringement because neither Limelight nor its customers’ actions alone constituted direct infringement, and incorrectly applied existing Supreme Court precedent in its ruling on Akamai’s induced infringement argument, said Ginger Anders, assistant to the solicitor general, during oral argument. Limelight’s appeal argues that “two or more people can divide up and perform the steps of any method claim, however drafted, without liability,” said Akamai counsel Seth Waxman of WilmerHale. Whether a ruling in the case would stick, since the appeals court had not ruled on Akamai’s alternate argument that the Limelight actions constituted direct infringement, was the question for several justices Wednesday. Justice Elena Kagan argued that the appeals court could later decide the case on the direct infringement argument, rendering the Supreme Court’s ruling on this appeal “a nullity” and that she was unsure its ruling “would be relevant for any case.” Justice Samuel Alito also questioned what the court’s role should be in the case. There is always “a potential that the prior rule might later be disturbed,” said Limelight counsel Aaron Panner of Kellogg Huber. Justice Stephen Breyer can “think of so many different kinds of situations with so many different steps in method patents where so many rights and wrongs of it are differently at play that I become worried about setting forth any rule,” he said.
Seventy-plus civil liberties and privacy advocates and industry representatives wrote President Barack Obama asking him to support an update to the Electronic Communications Privacy Act (ECPA) without a government agency exception (http://bit.ly/1kpgN80). Similar bills in the House and Senate would update ECPA to require a warrant to access remotely stored electronic communications such as email or Google Docs. “Seemingly, the only major impediment to passage is an objection by administrative agencies like the Securities and Exchange Commission, which would like to gut the legislation as a way to expand their investigative authorities,” wrote the groups Monday. “Such an agency carve out would be a major blow to reform efforts, allowing increased government access to our communications during the many civil investigations conducted by federal and state agencies.” It’s expected the White House will support an ECPA update in its big data report -- likely due out Thursday -- that includes an exception for some federal agencies (CD April 30 p14). “Support from the Administration for strong ECPA legislation without an administrative loophole would be an important step toward removing this roadblock,” the groups said.
Tablet usage is prompting more older adults in the U.K. to go online, the Office of Communications said Tuesday in a report on adults’ media use and attitudes (http://bit.ly/1m6wEJR). The survey, for which 2,674 people aged 16 and over were interviewed, found that 83 percent now go online using any kind of device in any location, with those 65 and over showing a 9 percent increase over the 2012 survey figure, it said. The number of adults using tablets to access the Internet rose from 16 percent in 2012 to 30 percent last year; use by people 35-64 doubled, while use by 65-74-year-olds trebled from 5 percent to 17 percent, the report said. Older adults are also more likely now to play games on mobile phones or the Internet, it said. Younger users tend to have a more liberal approach to regulation and moderation, and to use a range of strategies to manage their online experience proactively, while older people seem to prefer a more moderated and regulated experience, it said. The survey also found that compared to 2012 there are fewer non-users of the Internet now, with 12 percent saying they don’t have or want access at home, down from 15 percent two years ago.
Cyber Europe 2014, a cybersecurity exercise, kicked off Monday under the aegis of the European Network and Information Security Agency (ENISA). In this first of three phases of ENISA’s biannual cyber-exercise, participants -- including 29 EU and European Free Trade Agreement (EFTA) countries, computer security incident response teams, cybersecurity agencies, EU bodies, public entities, telecom operators and information and communication technology (ICT) vendors -- will try to resolve several large-scale technical cyberincidents similar to real-life cases, ENISA said in a Q&A document (http://bit.ly/S1fjJq). The next two stages will check the resilience of IT systems and response capacity at the operational and political levels, it said. This is a two-day exercise, ENISA said. Aggregated results “will be announced in overarching terms” at year’s end, ENISA Executive Director Udo Helmbrecht told us by email. The scenarios are “based on realistic potential incidents,” he said. The exercise goals are to: (1) Test how governments and industry work together on resilience of IT systems and response capacity in cases of serious cross-border security threats. (2) Check standard cooperation procedures in the EU. (3) Train and test national-level capabilities and see how effectively private-public and private-private players collaborate. (4) Analyze how events escalate and de-escalate; and understand those processes at all technical, operational and strategic levels as well as related public affairs issues linked to cyberthreats. The exercise wasn’t influenced by events in Russia and Ukraine, ENISA said in news release.
Microsoft will launch a slate of nongame content under the Xbox Originals banner for its Xbox game consoles and other devices, starting in June, it said Monday. The content will include dramas, comedies, documentaries, animation, unscripted shows and live events, it said on the Xbox Wire website. Each Xbox Originals show will have interactive capabilities, “customized on a per-show basis,” it said. Projects confirmed so far include a live-action TV series executive produced by Steven Spielberg based on the game series Halo, and Extraordinary Believers (working title), a stop-motion show being developed by Xbox Entertainment Studios and Stoopid Buddy Stoodios, creators of the animated TV show Robot Chicken, said Microsoft. Microsoft is hoping that Xbox Originals will provide a further “incentive” for consumers to make their Xbox consoles their “all-in-one entertainment” device, it said. The new Xbox One can already be used to control all TV viewing by connecting the console to a cable or satellite set-top box. Microsoft has been in the content business for a long time with games and creating original TV content is a “logical next step in our evolution,” said Jordan Levin, executive vice president-Xbox Entertainment Studios. “Many” of the new projects are already in production and have set release dates, but some are still in the early development stages, said Microsoft. Other programs will include Signal to Noise (working title), a six-film documentary series on technology that will include, as its first installment, Atari: Game Over about the excavation of a New Mexico landfill that Atari allegedly used to bury millions of unsold E.T. videogame cartridges, said Microsoft. Scott Free Productions and Microsoft’s 343 Industries game studio are also creating a digital feature film based on the Halo game series that will be released later this year, said Microsoft. That project will be executive produced by filmmaker Ridley Scott and Scott Free TV President David Zucker, said Microsoft.
Pandora’s number of active users grew 8 percent in Q1 over the year-ago quarter to 75.3 million, while listener hours grew at a 12 percent rate to 4.8 billion, said CEO Brian McAndrews on an earnings call Thursday. McAndrews cited platform upgrades including alarm clock, sleep timer and station recommendations. Android app users are listening to Pandora significantly more than before the features were available, he said. Subscription revenue rose to $53.7 million from $18.4 million, according to an 8-K SEC filing. Advertising revenue jumped to $140.6 million from $96.7 million. Chief Financial Officer Mike Herring Herring told investors last spring “there’s a much, much bigger market opportunity in the free side” where far more people are willing to listen to ads in exchange for free music. On the lawsuit filed in New York State Supreme Court in Manhattan last week against Pandora on charges of unlawful use of pre-1972 recordings that aren’t covered under federal copyright law, McAndrews said he’s limited in what he can say about the suit, but thinks the “significant value” Pandora brings to artists is “beyond just royalties.” He cited access to more than 75 million monthly active users and exposure to a large breadth of catalogs “that go largely unheard” on terrestrial radio. In many cases, that exposure helps “extend the longevity of an artist’s career,” he said. McAndrews called the landscape of content licensing “a complex topic.” He cited recent rulings that were favorable to the company, including a court judgment last fall upholding the company’s right to perform all compositions in the ASCAP catalog. For the quarter, Pandora revenue grew to $194 million from $115 million in the year-ago quarter, and its loss narrowed to $28.9 million from $38.6 million. Its shares plunged 16.6 percent Friday to $23.51 on what analysts called declining faith among investors about Pandora’s growth story.