LightSquared’s foes assemble lobbying force over GPS issue

With the showdown heating up between Reston-based wireless broadband firm LightSquared and a broad coalition of players in the global positioning system industry, both sides are lining up lobbyists to sway lawmakers. At issue is LightSquared’s effort to expand its mobile broadband network — a move opposed by the GPS industry led by the Coalition to Save Our GPS, a group co-founded by Trimble Nagivation that represents 78 technology companies, airlines and transportation associations. The opponents say LightSquared would disrupt GPS signals to millions of receivers. This month, LightSquared hired four new firms to lobby on its behalf. Trimble, Garmin and John Deere (registered as Deere & Company, which uses GPS in agriculture and construction equipment) are pouring resources into their own army of lobbyists. Since January, Trimble has spent $840,000 in lobbying fees related to the LightSquared spectrum issue — including nearly $330,000 in the third quarter alone — according to records filed with the Senate. Most of Trimble’s lobbying on spectrum interference is through one of K Street’s leading firms, Akin Gump Strauss Hauer & Feld, to whom Trimble has shelled out $620,000 this year. Garmin has retained Dow Lohnes, paying the firm $70,000 since March on GPS interference issues; John Deere has spent $964,000 on in-house lobbyists. The Coalition to Save Our GPS, Trimble, John Deere and Garmin did not return requests for comment.

The federal government is letting phone companies put yet another fee on Americans' monthly bills. But don't worry, officials say: It is just one small part of a plan that will help more people get high-speed Internet service. Billions of dollars a year are getting reshuffled under the plan, approved Thursday in Washington. The main goal is to stop subsidizing telephone service, which nearly everyone in the U.S. already has, and start helping to spread access to broadband, which isn't available for some 18 million American households. The plan calls for about $4.5 billion a year raised by the Universal Service Fund—a line item buried in the fine print of most people's phone bills—to be redirected to the broadband effort from conventional phone service. But there is a catch: Some phone companies, projecting they would end up losers under a revised system for interconnection fees they charge each other for delivering calls, wanted to make up the losses somehow. They persuaded regulators to allow a new consumer fee, which is separate from the Universal Service Fund charge. The new levy starts at up to 50 cents a month and could rise as high as $2.50 a month, or $30 a year, in five years. The existing fee is paid by both landline and wireless phone customers. The new fee will apply only to landline phones. The plan "puts us on the path to get broadband to every American by the end of the decade," said Julius Genachowski, chairman of the Federal Communications Commission, after Thursday's unanimous vote by the commission. Consumer groups weren't happy. "We don't want the burden to be placed squarely on the backs of consumers, especially when many of these companies are hauling in big revenues," said Parul Desai, a lawyer for public-interest group Consumers Union. Phone companies don't have to charge the full 50 cents, and officials said they think the average increase in consumer phone bills will be closer to between 10 cents and 15 cents per month. FCC officials also said the companies could save billions of dollars under a related program approved Thursday that changes the fees companies charge each other for carrying or delivering phone calls. If companies pass on the reduced costs, consumers could see a benefit outweighing the new fees, but the companies could also choose to pocket the savings. The Universal Service Fund was created under a 1996 law and continued decades of efforts by the government to ensure that people in lightly populated areas can sign up for the same phone service their urban cousins enjoy. Regulators have tried for years to change the subsidy program, which ballooned to $8 billion last year from $4.6 billion in 2001. Those efforts failed because telecommunications companies successfully killed changes that would reduce their annual subsidies. This time, reaction from phone and cable companies was cautiously positive, although they noted that the FCC still hasn't released many details about its plan. Verizon Communications Inc. said the agency's "overall approach" seems to put the subsidy fund "on a sustainable path and will enable millions of American households to connect to the high-speed broadband networks that are playing increasingly important roles in our nation's daily life." The plan approved Thursday would phase out the phone-service subsidies over a period of years and would give telecommunications companies that are current recipients of funding first crack at getting money to provide broadband service in rural areas. The FCC would cap the size of the fund so consumers aren't stuck paying higher fees every year to support it. The cable industry's trade group expressed disappointment on one point, saying its concerns that phone companies will get first shot at some of the funds weren't heeded.

Comcast vs. Community: The Future of Broadband Competition

Longmont, Colorado has become ground zero for the battle over the future of access to the Internet. Because big cable and telephone companies have stopped us from having a real choice in Internet Service Providers and failed to invest in adequate networks, a number of communities have built their own networks. Chattanooga boasts the nation's best citywide broadband network, offering the fastest speeds available in the nation -- and the community owns it. That means much more of the money spent by subscribers stays in town, supporting local jobs. Longmont, a town near Boulder with 80,000 people, offers a glimpse at how difficult it can be for communities to make any level of broadband investment -- the big cable and phone companies hate any potential competition, no matter how limited. Longmont's elected officials all agree they need better broadband options to spur economic development. That's why they put a referendum on the ballot that will allow the city to use its existing assets to improve local broadband access. Not only are the mayor and city council unanimous in support of the referendum (2A) necessary for this, their opponents in the city election overwhelmingly agree also! And the local paper just editorialized in favor of it as well. Who then, is spending hundreds of thousands of dollars to derail it? Comcast and its allies, of course. And this isn't the first time. Back in the 1990s, the municipality-owned electric utility built a fiber ring to modernize its electrical grid. They took the opportunity to lay more fiber-optic cables than they would need, knowing that they could later be used by the city or partners to expand broadband access for all businesses and resident. Over several years, the City worked with a variety of partners to spur broadband deployment locally but a new state law in 2005 gutted their ability to work with private partners to expand broadband. Qwest had just pushed what become known as the "Qwest law" through the Colorado legislature. Starting in 2004, telephone and cable companies used their clout in legislatures across the nation to prevent communities from investing in broadband infrastructure. Now Longmont would have to pass a referendum to allow local businesses and resident to use a network the town built years earlier. In 2009, Longmont attempted to pass the referendum but Comcast and allies dumped over $245,000 into a "Vote No" campaign that spread fear and misinformation far and wide, resulting in 56% of the voters saying no. They set a record in local campaign spending, dwarfing previous amounts from all sides in any Longmont election. But after the election, when many learned they had been fooled by anti-competition propaganda, they wanted to revisit the issue. On November 1, they have their chance. But again, Comcast and allies are pouring millions into a campaign of misinformation. Their group has already been busted for erroneously claiming the mayor is against the initiative when he has been unequivocally in favor of it. With two weeks to go before election day, they have already surpassed their previous records by spending $275,000 while the pro-2A groups have yet to expend even $5,000. The true grassroots groups are making do with a website and volunteers countering Comcast's misinformation. The question is whether big companies like Comcast can again fool more then 50% of the voters with their glossy mailers and robo-calls. This is the real problem -- the debates have shown that the opposition to this measure comes almost entirely from outside the community. But Comcast's ability to flood the papers, airwaves, phones, and mailboxes with market-tested anti-government messages is unrivaled. The big cable and phone companies use the same tactics across the U.S., protecting their high prices and poor services from the only real threat of competition they face -- local community investment. The most recent mailer threatens that a broadband project would raise taxes, an outright lie given that the referendum text starts, "Without increasing taxes, shall the citizens of the City of Longmont..." But the anti-2A groups care about preserving Comcast's market power, not being truthful. Longmont could join the growing movement of communities that invest in their own broadband networks to ensure fast, affordable, and reliable connections creating local jobs and offering local benefits. While big citywide networks like Chattanooga's Gig Network have captured plenty of attention, hundreds of communities have made smaller investments -- like the ring Longmont build 14 years ago. Often without even borrowing money, local governments are expanding fiber-optic rings and connections to encourage economic development, create jobs, and lower the cost of providing city services. This could be the future of access to the Internet -- local initiatives benefiting local stakeholders, putting the needs of the community before the desires of distant shareholders. Longmont makes its decision on November 1. When will your community make yours?

Telecom admits law breach over broadband

Telecom has admitted it breached the Fair Trading Act after misleading customers about the amount of broadband data being used. It has reached a settlement with the Commerce Commission over the breach, which came about when inaccurate readings were used for approximately 97,000 customer accounts between November 2010 and June 2011 - caused by a software fault in its meters. The Commerce Commission today said that 47,000 Telecom customers were affected by the error, which only came to light after complaints. Since Telecom came to the Commerce Commission and admitted the breach, along with the refunds it is paying out, there will be no penalty imposed. Some customers had broadband speeds reduced down to dial-up speeds once their data cap was breached, others upgraded to more expensive plans due to "an incorrect perception about their data usage." Some were charged overage fees for the amount of data that they used above their data cap and others reduced data usage so as not to exceed monthly data allowances. Questions were raised about the accuracy of Telecom's data counting on online forums from January this year, but this story in June brought the issue to a head. Telecom admitted the fault two weeks after that story was published. So far Telecom has paid out more than $2.7million in refunds, the Commerce Commission said today. "We're pleased to have reached a settlement with Telecom and that they have made prompt refunds directly back to the customers who have lost out," said Stuart Wallace, Commerce Commission Competition Manager. "Telecom brought this issue to our attention as soon as they were made aware by their customers and have co-operated fully with the Commission. Due to Telecom's immediate admission of a breach of the Fair Trading Act, followed by appropriate compensation to customers, the settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers," said Wallace in a release published by the Commerce Commission this morning. Earlier this week, Telecom agreed to pay $31.6 million to five rivals for overcharging for its broadband services. Telecom put forward a demerger proposal in an attempt to tap $1.35 billion of government funding to build a nationwide broadband network and shed regulatory oversight, which it claimed was overly burdensome. If investors agree to the deal at next month's annual meeting, Telecom's Chorus network unit become a standalone listed entity, at a benefit of some $500 million to shareholders based on the Crown subsidy, according to independent adviser Grant Samuel's report. The shares rose 0.2 percent to $2.545 in trading yesterday, and have gained 17 percent this year.

FCC Forges Ahead With Broadband Buildout Plans

The Federal Communications Commission has voted unanimously to reform the Universal Service Fund and intercarrier compensation system. It is creating a new Connect America Fund, with a budget of US$4.5 billion to meet the end-goal of this policy shift: extending broadband infrastructure to rural Americans, as opposed to subsidizing rural phone service. That in itself could be seen as controversial: Certainly there are people in these areas -- to say nothing of their representatives in Congress -- who do not wish to see these subsidies end and have no interest in broadband-based services. However, that issue only scratches the surface of the potential conflicts triggered by this reform. Winners and Losers The policy change is pitting carriers such as AT&T (NYSE: T) against providers poised to benefit from the change, such as Comcast (Nasdaq: CMCSK). The new policy also is dependent on the premise that the FCC has the authority to regulate VoIP calls, which has not been established yet. The FCC, for its part, prefers to focus on the end-game. "The FCC's reforms will transform antiquated systems designed for the telephone era -- the Universal Service Fund and a related system of payments between phone companies known as Intercarrier Compensation," FCC spokesperson Mark Wigfield told the E-Commerce Times. By contrast, the Connect America Fund will extend 21st century broadband and mobility to rural America, he said. Just Part of the Transition For rural Americans who don't want to part with their telephone subsidies, tech analyst Jeff Kagan expressed his sympathies -- but added they will have to accept the transition. "There are limited dollars available. so the FCC has to reapportion its resources," he told the E-Commerce Times. "In general, communications are moving to broadband. It delivers telephone, TV and the Internet. We are only at the beginning of that curve." Transitions "are always noisy, awkward and messy," he said. "Eventually, we will get there. We may see pushback, stalling and other tactics, but we will get there." The Question of VoIP Carriers, needless to say, don't have to be convinced of the value of broadband. However, the FCC's position is going to lead to policy warfare between companies that focus on broadband and those that focus on more traditional services, T. Barton Carter, a professor of communication and law at Boston University, told the E-Commerce Times. AT&T has been reported as saying it will not collect the necessary fees, he noted. "What complicates this whole issue is VoIP," Carter continued. "The FCC has been struggling how to classify it, whether it is an information or phone service." From the 30,000 foot view, he explained, the issue is relatively simple: "This is reflective of the Obama administration's initiative to provide broadband access to people who don't have it. But like many things, the devil will be in the details as to who gets charged the fees for this, what regulations will apply, and how VoIP services are defined." From an even loftier perspective, the FCC does have a point, Carter said. "This is reflective of the struggle to shift from old communication technologies to new communication technologies with legislation that was written in the pre-broadband era." The last major piece of legislation was the Communications Act of 1996. "That is the legal basis on which these regulations are being crafted," said Carter. "To say we are in a different world now is a vast understatement." Protests Are Coming Given the various viewpoints, Carter anticipates any number of actions to stymie this move. Carriers can challenge any FCC action, either directly or indirectly, by not collecting fees, as AT&T has suggested. It would be up to the FCC to enforce the fees, which would invite another round of regulatory hearings and comment-making. Finally, the carriers can fall on their last resort, Carter said -- appealing to Congress. "It has been tried before and it will be tried again."

Commission requests Greece to implement rules to facilitate telecom networks roll-out

The European Commission has requested Greece to adopt legislation to make it easier for telecom operators to install facilities such as ducts, manholes, masts or antennae on, over or under public or private property. Greece was originally scheduled to adopt legislation on such rights of way by the end of 2006 when the country implemented the 2002 EU telecoms rules. But not all the necessary rules have yet been put in place. This failure has hampered the development of broadband internet. With a fixed broadband take-up of just 19.9% of the population against an EU27 average of 26.6%, a mobile broadband take-up of 2.6% compared to an EU27 average of 7.2% and only 41.2% of households having a broadband subscription against an EU27 average of 60.8%, Greece is lagging behind other EU Member States (see Digital Agenda Scoreboard). Broadband Internet is a bridge to Europe’s social and economic future. According to numerous studies, there is a strong correlation between an increase in broadband take-up and GDP growth Adoption of the new rules would give legal certainty to network operators and act as an incentive for them to invest in new networks, especially fixed and mobile Next Generation Access (NGA) networks. In this way Greece would be better able to attain the targets of the Digital Agenda for Europe and bring basic broadband to every European citizen by 2013. Given the current difficult economic situation in Greece, uncertainty about the procedures for installing broadband networks deprives the country of investment that would be useful for its economic recovery. The Commission’s request to Greece to adopt the rules on installation facilities takes the form of a ‘reasoned opinion’ under the EU infringement procedure. Greece now has two months to inform the Commission of the measures it has taken to comply with EU rules. If it fails to do so, the Commission could refer Greece to the EU’s Court of Justice. Background Greece adopted telecoms laws in 2006 implementing the EU’s telecoms Authorisation Directive (2002/20/EC) into national law. However secondary legislation regarding the “procedure for granting rights of way for electronic communications networks” and “base stations and antennae constructions that are exempted from authorisation” to complete the implementation have still not been adopted. EU telecom rules, in particular Articles 11 of the Framework Directive (2002/21/EC) and Article 4(1) of the Authorisation Directive (2002/20/EC) lay down precise provisions relating to the obligation of Member States to ensure the existence of timely, non-discriminatory, simple, efficient, transparent and publicly available procedures for granting rights to install facilities on, over or under public or private property to public communications networks operators.

Congress should dismantle net neutrality

In 2008, candidate Barack Obama promised, “I will take a backseat to no one in my commitment to network neutrality, because once providers start to privilege some applications or websites over others, then the smaller voices get squeezed out, and we all lose.” Following his election to the Presidency, he threw the democratic process in the backseat when his appointees implemented net neutrality without congressional approval. Thanks to this regulatory end-around, net neutrality is currently law, but it doesn’t have to be. Courts could strike it down before they review the President’s health care mandate, or Congress could take the first bite, rescinding the regulation under the little-known Congressional Review Act. Net neutrality has received intense scrutiny for more than five years but the arguments against the Federal Communications Commission’s (FCC’s) power grab have hardly changed, and given the current economic climate, the arguments have only gotten stronger. The only thing that has changed is the FCC’s evolving justification for its implementation. First, the FCC’s new net neutrality rules regulating Internet providers are price controls, plain and simple. Anyone paying more for their debit card or noticing the paucity of free checking these days ought to know the consequences of government rate-setting. Net neutrality explicitly bans “pay for priority” arrangements between broadband providers and other parties noting that “a commercial arrangement … would raise significant cause for concern.” Price controls alone should be “cause for concern,” not arrangements between private companies competing for subscribers. Let’s imagine for a second if the general ban on “pay for priority” extended to mass transit; highways for example. Traditional city roads are free and open to all, which has led to mass urban congestion. Northern Virginia traffic planners rejected this one-size-fits-all approach and adopted “HOT Lanes,” raising the social value of the traffic system by creating priorities and a chance for commuters to choose—or not. Even the FCC couldn’t avoid the harsh reality of market forces, conceding in their rule, “[W]e recognize that some network congestions may be unavoidable.” If only price controls were equally unavoidable. Second, this action is 100 percent speculation, with the Commission listing a few “alleged” violations. For example, the FCC mentioned the words “may,” “might,” and “prophylactic” (poor word choice, bureaucrats) more than 200 times in a 44-page rule. If the Internet were truly in danger, they’d list 200 instances of service providers blocking content; they cannot. What’s more troubling, despite the vibrant, innovative history of the Internet, is that the FCC dares to declare, “The record does not enable us to make a predictive judgment that the future will be more competitive than the past.” Really? Adding to the speculative and unnecessary nature of the rulemaking, the FCC admits “current industry practices” already promote the open Internet and provide a dynamic marketplace for consumers. If it’s already “industry practice” to allow consumers high-speed unfettered access to content, and these rules are merely “prophylactic,” why implement them at all? Which bring us to the third reason why government regulation of the Internet is a horrible idea: it is likely illegal. The D.C. Circuit Court already struck down the FCC’s attempt to regulate Verizon’s broadband management. Last year the FCC argued that Section 706 of the Communications Act, generally promoting broadband, gave the Commission sufficient authority to implement net neutrality without a vote of Congress. Now the FCC is taking the kitchen sink approach, citing nine separate sections and three separate titles of the Communications Act for that authority. The Commission claims that it isn’t concerned about court review, but if its power to enact net neutrality by fiat is so cut and dry, wouldn’t it need only one clear cut provision to cite? Instead, the FCC argues, “multiple Sections which, viewed as a whole, provide broad authority to promote competition, investment, transparency, and an open Internet….” You’ve heard of the “Living Constitution.” This is the living Communications Act, and the consequences are equally dire. Congress never got a chance to formally decide net neutrality. Now they will. Choosing between government rate-setting and allowing “current industry practices” to continue should be an easy decision, even for Congress.

Reliable Wireless Broadband Access in Rural Washington Makes Us All Safer

The mobile products we see in more and more homes, schools, and childrens' hands are the same products law enforcement and emergency responders can use to improve their response time and situation management. The only thing missing in many areas of Washington is reliable wireless broadband connections. As a member of the Washington Fire Commissioners Association, I know first-hand the need for reliable communication among departments, quick assessment of situations, and the benefits of easy access to education and training. Rural area firefighters, law enforcement and emergency responders will benefit immensely from the spread of quick, reliable broadband. We expect Washington state, home to many members of the tech industry, to lead the way in access. However, once you're outside of the big city, connection speed and access drops. In fact, Washington state ranks below the national average for total homes in broadband connectivity of at least 10 mbps (7.4% compared to 11.5%), according to the Washington State Broadband Report. To view the report, visit http://broadband.wa.gov/sites/default/files/docs/WashingtonStateBroadbandReport.pdf. The report further highlights that nearly half of all residents have access to connectivity of only at least 3 mbps. Think how much faster and how much more information our firefighters and police could have with better communications connections. Or how much time they would save training from their computer at home with their families. Or how much more information can be sent directly to your pocket. The technology of today can provide these easy to use technologies if the connection is right. In his State of the Union address in January, President Obama pledged to bring high-speed wireless to 98 percent of Americans within the next five years. While public sector commitments to growth in broadband are worthy, our representatives in Washington, D.C. should look for ways to help the private sector to expand wireless access across the country and right here in Washington state.

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Professor polices traffic shaping

Attention ISPs. A Syracuse University professor and his team are on the lookout for traffic shaping. The group has developed tools to enable broadband subscribers to detect traffic shaping on their accounts as they use apps such as BitTorrent and Gnutella or use Flash video apps such as YouTube. Dubbed The Network is Aware, the project also maintains an interactive table that graphically depicts throttling activity by ISP. Ars Technica reports that according to that data, several ISPs—especially the cable companies–cut back dramatically on throttling after 2008, when the FCC ruled that throttling violated Net Neutrality guidelines. That decision was subsequently overturned, but the story doesn’t say if throttling has risen as a result. When the FCC published its Open Internet Order in the Federal Registry last month (blog: Net Neutrality debate set to re-heat), it set the stage for a whole new round of lawsuits about whether the FCC has the authority to impose such guidelines and about what does and doesn’t constitute a Net Neutrality violation. Traffic shaping is likely to be a key element of that debate, so we should expect to hear more about The Network is Aware moving forward, as various parties draw upon the data to support their views. The Network is Aware is supported by the National Science Foundation. But it’s not the first time a government agency has set out to gather evidence against traffic shapers. The FCC earlier this year organized a competition for researchers and software developers to create applications to provide information about the extent to which broadband providers were consistent with the open Internet (blog: FCC Open Internet Challenge attempts to put horse back in front of cart).

CTIA Backs FCC on Net Neutrality Rules

CTIA: The Wireless Association has joined the FCC's side in the legal fight over the commission's new network neutrality rules, which take effect next month. CTIA filed a motion to intervene with the U.S. Court of Appeals for the D.C. Circuit, signaling to the court that it stands by the FCC's decision last December to codify and expand its network neutrality principles. The legal battle at issue is not the challenge to the rules by Verizon (Verizon Wireless is a CTIA member) as sweeping and unneeded regulation, but the separate challenge to the rules by Free Press and others who took issue with the FCC's decision not to apply the openness and access requirements on mobile broadband, saying there were differences that justified that disparate treatment, but that it would monitor the space and adjust that decision as necessary. "For several independent reasons the FCC determined that 'mobile broadband presents special considerations that suggest differences in how and when open Internet protections should apply,' CTIA told the court. "The FCC accordingly imposed fewer regulatory burdens on mobile Internet access services than on their fixed-line counterparts. Petitioners challenge the FCC's determination that 'wireless is different' and its decision to regulate mobile services more lightly. CTIA wishes to defend the FCC against that challenge and any related arguments that the FCC erred in imposing too few regulatory burdens."

Wireless Group Sides With FCC in Net Neutrality Suit

The net neutrality battle took another turn Wednesday, with CTIA, the wireless trade group, intervening in one of the cases looking to alter the FCC's rules. But it might not be the one you'd imagine. Though one of its members, Verizon, has asked the court to strike down the FCC's rules, CTIA is staying neutral on that point and is instead moving to intervene in a case filed by consumer group Free Press. D.C.-based Free Press sued the FCC in late September arguing that its net neutrality rules do not go far enough in respect to wireless companies. The group's lawsuit, filed in a Boston appeals court, seeks to "challenge the arbitrary nature of rule provisions that provide less protection for mobile wireless Internet access than they do for wired connections." Essentially, Free Press is irked that the net neutrality rules do not apply to wireless and wireline broadband providers equally. After a long back and forth, the FCC decided that wireless was still an emerging market and only imposed some of its rules on the industry. Naturally, CTIA wants to keep it that way, and does not want Free Press to prevail. While wireless companies might prefer no intervention at all on the issue, if it has to happen, this hybrid approach that puts wireless in a special category is preferable to one that treats all broadband providers alike, whether they be fixed or mobile. "As the leading trade association for the wireless communications industry, CTIA also has a significant interest in defending the FCC's decision not to impose additional regulatory burdens on mobile broadband providers," CTIA said in its filing. "CTIA's interests (as well as those of its members) would be directly affected by a decision of this Court to stay, modify, affirm, or set aside the Order." The FCC approved its net neutrality rules in December and they officially go into effect on November 20. For those who need a refresher, net neutrality is the concept that everyone should have equal access to the Web. Amazon should not be able to pay to have its Web site load faster than a mom-and-pop e-commerce site, for example. After Comcast was accused of blocking P2P sites, however, the FCC decided to craft rules that would ban ISPs from discriminating based on content. It was OK to slow down your entire network during peak times, for example, but you couldn't block a particular site, like BitTorrent. The rules approved by the FCC give the commission the authority to step into disputes about how ISPs are managing their networks or initiate their own investigations if they think ISPs are violating its rules. While companies like Verizon might agree with net neutrality in principle, they argue that the FCC did not have the authority to hand down such rules. Verizon filed suit recently on those grounds, but CTIA said it "does not seek to intervene" in that case. The FCC has asked that the court toss the Verizon suit.

U.S. copyright bill may hit legal sites: Report

An upcoming version of U.S. legislation designed to combat copyright infringement on the Web may include provisions that hold online services such as Twitter, Facebook and YouTube legally responsible for infringing material posted by users, according to one group opposed to the bill. Two members of the U.S. House of Representatives are expected to introduce a new version of the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (the PROTECT IP Act or PIPA) this week. The bill could be similar to a version of the PROTECT IP Act approved by the Senate Judiciary Committee in May, but could include new legal liabilities for websites and online services that host user-generated content, said Demand Progress, a liberal civil liberties group opposed to the legislation. The Senate version of the bill would allow the U.S. Department of Justice to seek court orders requiring search engines and ISPs to stop sending traffic to Web sites accused of infringing copyright. The Senate bill would also allow copyright holders to seek court orders requiring payment processors and online ad networks to stop doing business with allegedly infringing websites. If Demand Progress is correct about the House version of PROTECT IP, the bill would overturn parts of the 13-year-old Digital Millennium Copyright Act that protect Web sites and ISPs from copyright lawsuits for the infringing activity of their users. "Our allies on [Capitol] Hill say the bill's so bad that it could effectively destroy YouTube, Twitter, and other sites that rely on user-generated content by making the sites' owners legally responsible for everything their users post," the group said in an alert to members. More than 30,000 U.S. residents sent messages to their lawmakers early Tuesday, Demand Progress said, after the group called on its members to ask their elected representatives to refuse to sponsor the House version of PROTECT IP. The House version is expected to be introduced this week by Representatives Bob Goodlatte, a Virginia Republican, and Lamar Smith, a Texas Republican. Demand Progress will oppose the House bill if it looks like the Senate version, said David Segal, Demand Progress' executive director. "We ask even those lawmakers who are leaning towards supporting it to hold back for now, decline cosponsorship, and listen to opponents' concerns," he said in an email. "The Senate version of PROTECT IP will stifle free speech and innovation -- and all indications are that the House version will be even worse." A spokeswoman for Goodlatte declined to comment on the legislation, referring questions to the House Judiciary Committee, where Smith is chairman. A spokeswoman for Smith didn't respond to a request for information about the bill. Supporters of PROTECT IP say the bill would help shut down foreign websites that sell counterfeit, and sometimes dangerous, products. PROTECT IP would save U.S. jobs by shutting down online sales of counterfeit products, Steve Tepp, chief intellectual property counsel for the Global Intellectual Property Center at the U.S. Chamber of Commerce, wrote in a blog post last month. "Rogue sites ... flood the U.S. marketplace with dangerously defective products, attract more than 53 billion visits per year, and have total disregard for U.S. laws which are designed to protect consumer safety and intellectual property," Tepp wrote. "Consumers should be able to rely on trust and good faith in buying legitimate products online. Rogue sites and online criminals abuse this trust for their illicit gain." Several other groups have raised concerns about PROTECT IP. On Monday, trade groups the Consumer Electronics Association, the Computer and Communications Industry Association and NetCoalition sent a letter to Smith, Goodlatte and other House Judiciary Committee members, asking them to hold off on legislation and wait for more input from affected groups. The three trade groups also sent a letter to other House members, asking them to consider potential "collateral damage" to the Internet before co-sponsoring PROTECT IP. The stakes are high, the letter said. "The technology industry is leading America out of the recession, and inadvertent damage to the tech sector could not happen at a worse time."

Why Obama Wants to Dismiss the AT&T Antitrust Case

The Justice Department’s challenge to AT&T’s proposed merger with T-Mobile at first blush looked like a gutsy show of force, one that suggested a surge in Obama administration antitrust activism after a modest start. Justice officials portrayed the merger of the second and fourth largest U.S. wireless carriers as a blatant monopolistic move that would sharply reduce competition and hamper innovation. “The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” Deputy Attorney General James M. Cole declared. But for President Obama, the August 31 Justice Department action is beginning to shape up as the antitrust case from hell -- one that he would probably gladly see settled. Beyond the angry backlash from AT&T and T-Mobile, the lawsuit has infuriated Obama’s political base – especially organized labor – just as he is struggling to mend fences with these core supporters. The Communications Workers of America in particular has blasted the Justice Department action. AT&T announced that it would return 5,000 wireless jobs to the United States following the merger and create about 100,000 jobs as it builds high-speed broadband service to 97 percent of the country. “The DOJ's action would put good jobs and workers' rights at the bottom of the government's priorities,” CWA President Larry Cohen said in a statement. “Instead of acting to block this merger, our government should be looking to support companies that create, keep and return good jobs to the United States.” Angering CWA isn’t a good idea because the labor organization has been a top donor to Democratic presidential candidates. Since 1989, the union has contributed over $30 million, 94 percent of which went to Democrats, according to the Center for Responsive Politics. Cohen warned that Democrats would pay a price for the lawsuit. Other labor leaders echo that displeasure with the administration. When pressed about the lawsuit, Thea Lee, AFL-CIO deputy chief of staff, told The Fiscal Times, “We think that it is ill-advised.” She said labor has made its position clear to the White House. “Our goal is to be in communication with the White House at all times. When we like something, we say so. When we don’t like it, we say so.” The lawsuit stunned AT&T officials, who apparently assumed the proposed $39 billion deal would sail through without objections from federal watchdogs. AT&T may have been lulled into complacency because Obama last January picked as his new chief of staff William Daley, the former president of SBC Communications, which merged with AT&T. But the White House insists it steered clear of any involvement in the anti-trust decision – and for good reason. Interfering with a government law suit is risky business. One of the many scandals that plagued President Nixon before he was toppled by Watergate was when he ordered the Justice Department to drop its antitrust case against International Telephone & Telegraph (ITT), which had promised a $400,000 contribution to his reelection campaign. Obama officials already have their hands full trying to tamp down criticism that the Energy Department and White House were guided by political consideration in awarding $535 million in federal loan guarantees to Solyndra, the now-bankrupt solar firm. “The White House did not have a role in making the [antitrust] decision. The Justice Department made the decision,” White House press secretary Jay Carney said last month. “They look at the factors, they make the call.” The Obama White House did not respond to questions from The Fiscal Times to comment on the political fallout from the lawsuit. A Justice Department spokeswoman said, “The department made its decision based on the facts and the law. There was no influence from the White House.” The proposed merger would create the largest wireless company in the country, one that would combine AT&T's 98 million customers with T-Mobile's 34 million users, for a total of 132 million subscribers. AT&T is currently second to Verizon in the number of wireless subscribers, and T-Mobile is fourth. The Justice Department said the merger would lead to a situation in which just two companies -- the AT&T-T-Mobile combination and Verizon Wireless -- would dominate the mobile market. The new AT&T and Verizon would account for more than two-thirds of wireless subscribers and 78 percent of the wireless industry's revenues. The case is now slated to begin early next year—just as the political season heats up and just as Obama will be counting on the vast labor grassroots network to knock on doors, man phone banks and canvass voters. It’s possible, though, that AT&T may spare itself and the White House the agony of a protracted court case by offering concessions to address the government’s concerns that the T-Mobile deal is anti-competitive and could cause the prices of wireless service to rise. But that would require AT&T to sell up to 25 percent of T-Mobile business, including airwaves and customers, to avoid a situation in which just three companies controlled 90 percent of the U.S. wireless market. Even as Obama might fear fallout from the case, consumer activists argue that the lawsuit is a simple recognition that this proposed merger crosses a line the Justice Department simply could not ignore. “If you talk to any independent antitrust person and give them the numbers, their reaction is there is no way that…Justice could allow it to go unchallenged,” said Andrew Schwartzman, senior vice president and policy director of Media Access Project, a public interest law firm. Even as Obama might benefit politically from a speedy resolution of the case, consumer advocates dismiss that possibility. “I don’t see settlement as remotely possible,” Schwartzman said. “Absent some really adverse pretrial ruling by the judge or some unusual event, I regard the prospect of a settlement here as extremely low. If you read the Justice Department’s [sweeping, detailed] complaint—it was not filed as part of [a strategy of] forcing settlement discussions.”

European Parliament to vote on net neutrality

The debate on net neutrality has gone on long enough. A lot of people have weighed in on the topic, ranging from regular users to heads of broadband firms to government officials and industry analysts. Earlier, Virgin Media’s CEO of entertainment Neil Berkett said that there was no need for net neutrality in the UK as the competition in the industry was already healthy enough. Berkett stated: “As such, the average return from a triple-play customer [TV, broadband and phone] in the US is £70 to £80, but for us it’s £44. Consumers benefit from this as the market is so competitive, but enforcing net neutrality would cut this off at the knees.” The the Body of European Regulators of Electronic Communications (BEREC) also weighed in on net neutrality, explaining that ISP transparency is a pre-requisite of net neutrality: “We believe that a fully effective transparency policy should fulfil all of the following characteristics: accessibility, understandabilty, meaningfulness, comparability and accuracy.” In fact, a report published by Plum Consulting stated that “irreversible harm” may be done if net neutrality is ignored. Their findings state in part: “Some network access providers have claimed that the open internet model should now be changed. They argue that growing demand for content and applications is a problem… We conclude that there is no reason to believe that a departure from the open internet norm would be economically efficient – rather, we find a departure from this model would risk irreversible harm.” But now, it’s time for the European Parliament to weigh in on the matter. The pro-net neutrality side got a boost when a member of the parliament committee voted to provide them with protection last Thursday. The industry committee voted to adopt a resolution that backs the principles of net neutrality, and this same resolution will be up for a parliament vote in November during a plenary session. The adopted resolution was supported unanimously by the industry committee, voting 35 to none with 4 abstentions. The document stated that the “potential challenges when departing from network neutrality [include] anti-competitive behaviour, blockage of innovation, restriction on freedom of expression, lack of consumer awareness and infringement of privacy.” It also concluded the following: “The lack of net neutrality hurts both businesses, consumers and society as a whole.” The resolution also backs existing EU resolutions on promoting effective and healthy competition, stating: “Any measure in the area of net neutrality should, in addition to existing competition law, provide tools to deal with any anti-competitive practices that may emerge, as well as lead to investment and facility new innovative business models.”

Groups oppose Want Want deal

Protesters from 12 civic groups yesterday voiced their opposition to an attempt by Want Want China Times Group to acquire China Network Systems, gathering outside the National Communications Committee (NCC) in Taipei while a second public hearing on the deal was being held. Anti News-buying Association deputy convener Ho Tsung-hsin (何宗勳) said the commission was no longer fit to review the deal after three members with expertise in mass communication, law and economics left the committee, leaving only four members with telecommunication and technical know-how to decide the case. Ho urged Chinese Nationalist Party (KMT) Legislator Hsieh Kuo-liang (謝國樑) to drop a lawsuit against Internet news source Newtalk Web site reporter Lin Chao-i (林朝億) for reporting that Hsieh had tried to pressure the commission into approving the merger. Ho said Hsieh’s lawsuit was harmful to freed speech. The groups also urged the commission to block the merger, saying that its approval could have a chilling effect on the media environment and undermine the diversity of opinion offered to the public. “No other regulator in the world leans toward corporations as much as the NCC does, so we urge the commission to be independent,” said Lin Lih-yun (林麗雲), director of National Taiwan University’s (NTU) Graduate Institute of Journalism. During the public hearing, all seven academics invited to attend expressed concerns about or clear opposition to the merger. Jang Show-ling (鄭秀玲), a professor at NTU’s economics department, said according to the principles and calculation methods of German Commission on Concentration in the Media (KEK), a merger should be blocked when a corporation attempts to control more than 30 percent of intermedia influence. Intermedia influence should also be accumulated, instead of individually calculated from different media platforms, Jang said, adding that Want Want would influence much more than 30 percent of all media if the merger were approved. NTU Graduate Institute of Journalism professor Chang Chin-hwa (張錦華) said a Control Yuan investigation concluded that the China Times allowed the Chinese government to place news inserts and Chinese corporations to buy advertisements in its newspaper. Chang said the China Times had also reduced its reporting on human rights violations in China since a previous merger. “It’s hard to teach journalism students when they see this kind of media environment, in which news can be bought as advertisements,” she said. “The media should set a good example and gain the trust of its audience.” The academics urged Want Want China Times Group to be more specific on its promise to improve the quality of its content and maintain free speech in the media. Chen Ping-hong (陳炳宏), a professor at National Taiwan Normal University’s Graduate Institute of Mass Communications, said that while obeying the law was mandatory, this was not enough to ease public concerns about a lack of content diversity. Want Want China Broadband chairman Tsai Shao-chung (蔡紹中) has repeatedly said that the object of the merger is the “platform” and not “the media,” and that the network systems are not actual content providers. He said the merger would be a big step ahead for the industry in terms of digitalization and that Want Want would improve the quality of its content by establishing a better digital media environment so content providers could be confident in investing in high-quality programs. Tsai said plans to increase the rate of media digitalization in Taiwan have been pushed back because the review of the merger has dragged on for almost 10 months.

Google's Playing With Antitrust Fire If It's Courting Yahoo

A rumored move by Google to possibly finance a buyout of Yahoo’s core business so that it can A) sell ads across Yahoo’s websites or B) raise the purchase price for its rivals would be recklessly incendiary — the functional equivalent of Google playing with matches in a fireworks factory. To understand how reckless this behavior would be for a major publicly-traded company under antitrust investigation around the world for monopolistic abuses, let’s examine the behavior (the matches) and the context (the fireworks factory) involved. First, it would be anti-competitive for #1 Google to buy part of #2 Yahoo to gain business leverage over Yahoo and to extend Google’s dominant advertising service to Yahoo’s audience, because the Google-Yahoo cross-ownership would undermine Yahoo’s ability to compete with Google. Google supplying advertising for Yahoo also would make Yahoo dependent on Google and reduce its incentive to compete with Google over time. Google’s efforts also could be perceived as a deceptive back-door scheme to break up the Yahoo-Microsoft search advertising agreement, which was approved by the Department of Justice in 2010 in a last-ditch effort to create at a viable competitive alternative to Google’s dominant online advertising platform. Second, it would be anti-competitive if Google were involved in the bidding for Yahoo not because it was interested in owning part of the company but instead in order to drive up the costs of its rivals. Using market power to collude to manipulate an informal auction of a public company that is Google’s leading competitor, with the purpose of driving up acquisition costs to make it harder for rivals to successfully compete, would be classic Sherman Act illegal monopolistic behavior. A Google representative declined an offer to comment on this piece. The Context (the fireworks factory): First, if the WSJ’s report were true, Google would be thumbing its nose at the DOJ, which officially warned Google to tread carefully less than three years ago. In 2008, the U.S. DOJ threatened a Sherman Act Section 1 and 2 monopolization case against Google in order to block the proposed Google-Yahoo Ad Agreement. A Sherman Section 2 is the most severe antitrust action the U.S. Government can take, because it involves potential criminal felonies carrying a potential 10-year sentence. Google’s largest advertising customers strongly opposed the proposed ad agreement between Google and Yahoo in 2008 as collusive and anti-competitive. One can assume major advertisers would oppose another attempt at a Google-Yahoo mashup given that Google now has about 80% of U.S. search revenues, per eMarketer, and 97% of mobile search share, per Statcounter, and is quickly approaching control of over half of all U.S. online revenues per IAB. Simply, Google would be blowing off the DOJ’s most serious warnings to not collude with its largest direct competitor by essentially re-proposing to accomplish the previously-blocked 2008 Google-Yahoo ad agreement via different means. To make matter worse, this would not be Google’s only recent run-in with law enforcement. Just two months ago, Google admitted to criminal felonies in the DOJ-Google Non-Prosecution Agreement and paid a near-record $500 million criminal forfeiture for aiding and abetting illegal prescription drug imports and sales despite being warned several years ago by law enforcement. The U.S. Attorney also made it clear that Google CEO Larry Page was aware of the criminal activity for years and did not stop it. Second, Google would be recklessly pushing the antitrust envelope at the same time it is under serious antitrust investigations around the world. Currently, Google’s business practices are under antitrust investigation by the FTC, DOJ, Texas, California, New York, European Union, and Korea. Enforcement action by the EU is most likely and most imminent, given that: Google’s market share in Europe is 90+%; there are at least nine antitrust complaints against Google pending there; the EU’s monopoly law is tougher than the U.S.; and the EU investigation is approaching the one-year mark. Third, Google would be reckless to incite further investigation given that it already has the worst antitrust track record of any major public company over the last three years. In 2008, DOJ blocked the Google-Yahoo ad Agreement. In 2009 and 2010 the DOJ twice opposed the Google Book Settlement for trying to establish an ill-gotten monopoly. In 2009, the FTC forced then Google CEO Eric Schmidt off of Apple’s board as an anti-competitive arrangement. In 2010, Google and other companies settled with the DOJ over illegally and anti-competitively colluding to keep competitors from poaching Google’s employees. And in 2011, Google entered into a court-supervised consent decree to mitigate the anti-competitive effects of the ITA acquisition. In sum, Google is playing with antitrust fire. Just last month, a bipartisan Senate antitrust oversight subcommittee strongly urged Google to recognize that Google’s market dominance carries special responsibility to not act anti-competitively. In this context, Google’s reported efforts to co-opt its leading competitor Yahoo are at best provocative, and at worst a catch-us-if-you-can taunt to law enforcement. Most curious is why private equity firms would consider working with Google to raise capital for a joint bid for Yahoo. Google’s involvement would raise their acquisition costs and lower their potential returns by pumping up the deal price, while also dramatically increasing deal risk and time to close. What might they be thinking?

Cox Communications in line with 1995 deal, New Orleans City Council says

Cox Communications has "substantially complied" with the terms of the 1995 franchise agreement authorizing it to provide cable television service in New Orleans, the City Council has ruled. The action, approved 7-0 at the council's meeting last week, does not lock the council into renewing Cox's franchise when the current agreement expires at the end of the year, but it was a necessary precondition for such a renewal. In fact, there has never been much doubt that the city would renew its agreement with Cox. When the council in April issued a request for proposals from potential cable providers, only Cox responded, meaning the city has had limited bargaining power. Federal laws and Federal Communications Commission decisions also have sharply curtailed the city's negotiating ability. Even if other companies were seeking permission to provide cable to local customers, said William Aaron, a legal adviser to the council on telecommunications issues, council members could not arbitrarily refuse to renew the Cox franchise. The council could do that only on the basis of certain limited criteria, such as that the company has not lived up to the terms of the 1995 agreement. Cox has had a nonexclusive franchise to operate in Orleans Parish since 1981, meaning that other companies also can apply to provide cable services, though none has done so. The franchise was renewed in 1995. Cox pays the city a 5 percent franchise fee on its cable revenue, amounting to about $3.4 million per year, but federal law prohibits the city from charging a similar fee on Cox's revenue from Internet or telephone services, Aaron said. Unlike in 1995, Aaron and fellow legal adviser Basile Uddo added, the city now cannot ask for much from Cox beyond the 5 percent fee. In 1995, the council required Cox to pay the city $1 million per year to support groups that produce programs for the cable system's public access channels. The company also was ordered to pay the city $500,000 to equip studios for producing community-access programs. The city had to provide a $200,000 matching payment. Under the current rules, the cost of access programs will have to come out of the city's 5 percent fee, the council's advisers said. However, they said, the council has made clear to Cox that it considers maintaining the channels that carry educational, governmental and community-produced programs to be vital. "The council will do everything possible to keep the access channels," Councilwoman Cynthia Hedge-Morrell said. Aaron and Uddo said they believe Cox "has gotten the message" and that the franchise renewal to be presented by December will provide for continuing the access channels. In its response to the city's April request for proposals, Cox noted that it provides five such channels, which are managed by New Orleans Access Television, a nonprofit entity. Subscribers are charged $1.07 monthly to cover the $1 million annual cost of supporting the channels. Cox said it "will continue to provide an outlet for noncommercial PEG (public, educational and governmental) programming." However, it said, "in light of the lack of information demonstrating the community's interest in the channels," it was unable at that time to say "what that outlet might consist of." Despite the finding of overall "substantial compliance," the council and Cox still disagree over whether the company has complied with a few relatively minor provisions of the 1995 agreement, Aaron said. One involves less than $400,000 in payments that the city says Cox owes; the company contests that claim. Another issue concerns whether Cox complied with a provision concerning establishment of an I-net closed-circuit broadband system connecting public buildings. Cox said the city never told it to start work on such a system. The council contends that Cox was supposed to take action on its own. Either way, the city never pressed Cox on the issue, but the Landrieu administration appears to have more interest in creating such a system than its predecessors did. The council hired engineering consultants to review Cox's technology and make sure it has met all the technical demands in the 1995 agreement. The review found that Cox's system is "first-rate," Aaron said. Federal law prohibits the council from negotiating with Cox about the rates it charges its customers. The federal government now has sole authority to regulate the rates.

Lawmakers to explore legalized Internet gambling

Gambling advocates will have the chance this week to persuade lawmakers that the time has come to legalize online betting. The House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade will hold a hearing Tuesday to discuss the issue of Internet gambling, which became a hot-button topic in April after the Obama administration cracked down on online poker and other betting sites. The House Financial Services Committee approved a bill to legalize and regulate online gambling during the last Congress under the leadership of then-Chairman Barney Frank (D-Mass.), but with staunch gambling opponent Spencer Bachus (R-Ala.) now in charge, the Energy and Commerce Committee is considered a more attractive option for moving legislation. Former casino mogul Donald Trump added his support to the cause Thursday, arguing that online gambling should be legal and declaring his intent to launch an online gambling operation once it is. A spokesman for the Commerce Committee said the subcommittee hearing would focus on the issue of online gambling as a whole, rather than poker specifically, though a number of organizations have recently increased the pressure on Congress to legalize the card game alone. Supporters of online poker argue it is a game of skill rather than luck. Energy and Commerce Committee member Joe Barton (R-Texas) introduced a bill this summer that would legalize and regulate online poker that has drawn strong support from casino owners such as Caesar’s and MGM — both of which stand to benefit greatly should the game be sanctioned by the government. On Monday, AT&T will try to persuade U.S. District Judge Ellen Huvelle to throw out lawsuits from Sprint and C Spire Wireless seeking to block AT&T’s proposed $39 billion purchase of T-Mobile. Sprint and C Spire argue the deal would violate antitrust law by stifling competition in the wireless market, but AT&T says its rivals lack the appropriate legal standing to block the deal. The Justice Department has also sued to stop the merger, and Judge Huvelle will check in with the two sides in that case Monday in a status conference. The trial in the Justice Department’s case is set to begin Feb. 13. Also Monday, the U.S. Chamber of Commerce will host a morning summit to educate small businesses on how to better prepare for today’s growing threat to their cybersecurity. Speakers include Federal Communications Commission Chairman Julius Genachowski, Department of Homeland Security Deputy Undersecretary for Cybersecurity Greg Schaffer and National Cyber Security Alliance Executive Director Michael Kaiser. The Competitive Enterprise Institute will hold an afternoon briefing Monday at Cannon House Office Building on H.R. 2885, which would require all U.S. firms to check the employment eligibility of new hires using the Department of Homeland Security’s E-Verify system. A coalition of liberals, conservatives, business groups and privacy advocates has formed to oppose the bill, which was recently approved by the House Judiciary Committee. Speakers will include representatives from the ACLU, Center for American Progress, Institute for Liberty and National Small Business Association. Among the bills scheduled for markup by the House Judiciary Committee on Tuesday is H.R. 3012, the Fairness for High-Skilled Immigrants Act. Sponsored by Rep. Jason Chaffetz (R-Utah), the legislation would eliminate per-country limits on the number of H1-B and other visas aimed at skilled immigrants. The bill would also increase the per-country limits for family-based immigrants (those sponsored by a spouse or relative in the United States). The public relations firm Ogilvy will host a discussion on online privacy issues Wednesday morning. The event will feature Erin Egan, the new director of privacy for Facebook; Stephen Balkam, CEO of the Family Online Safety Institute; and Mark Rasch, director of cybersecurity and privacy consulting for information technology company CSC. The Hill’s Brendan Sasso will moderate. Participants will discuss the changing concept of privacy in the digital age as well as possible government regulations aimed at protecting consumer privacy. The event begins at 8 a.m. at Ogilvy’s Washington office. THURSDAY: The FCC will hold its open meeting, where the commissioners are set to vote on plans to overhaul the $4.5 billion high-cost portion of the Universal Service Fund by shifting the focus from subsidizing landline phone service to broadband Internet access. Observers are watching closely since Chairman Genachowski has yet to make the details of his proposal public. The commission will also consider a plan to revamp the intercarrier compensation system that sets the rates phone companies must pay each other to complete calls.

Patents protect innovation as the price of intellectual property rises

ZTE president Shi Lirong writes for GTB about the remarkable rise in the price of patent portfolios in 2011. ZTE, which invests 10% of its revenues in R&D, takes IPR seriously, says Shi The subject of patents has developed recently into one of the most talked about matters in telecommunications. Disputes about intellectual property rights have made occasional headlines in the past, but were viewed by most commentators as being the preserve of the legal departments. Patents have now become a boardroom matter. Yet, for those of us deeply involved in telecoms, patents are entwined through the historical and technological DNA of communications. If necessity is the mother of invention, patent law becomes its protector. Without patent law, the costs and risks of research and development would deter serious investment, consequently few could innovate and the industry would stagnate. Patents, like standards, form the bedrock of our industry. The concept of a patent, being a documentary proof of invention providing its creator with the legal recourse to impose a demand — usually a fee — on its use by others dates back as far as 500 BC. The codification of patent law can be traced back as far as the 15th century, but it had to wait until the late 20th century before it became truly international. Typically, nation states grant inventors the right to hold a patent. However, steady globalization of business and the development of the truly borderless corporate enterprise, due to mass, rapid, affordable transit, in combination with huge progress made in communications, has resulted in the creation of international treaties such as the Patent Cooperation Treaty administered by the World Intellectual Property Organization, a UN agency, which covers more than 140 countries, centralizing some portion of the filing and examination procedure of patents. Cooperation and teamwork The success of telecoms, cellular communications in particular, is as a result of interoperable standards. Cooperation and teamwork in a competitive environment have seen mobile connections jump from effectively nothing to approaching six billion in 20 years. The benefits of globalization in combination with improving education and a shifting workforce means ideas are more easily shared. In communications technologies there is a necessity for ideas to be shared, in fact, without collaboration the industry would be completely fragmented. We would have pockets of barely interoperable communities. Of course, ideas cannot simply be given away and recent developments on the world stage show the financial lengths some companies will go to in order to protect their position in the market. Earlier in 2011, for instance, Microsoft, Sony, Ericsson, EMC and Research in Motion clubbed together to spend $4.5 billion for about 6,000 patents owned by Nortel Networks, a bankrupt former telecoms equipment competitor. The patents covered a wide variety of technologies in cellular, including 4G wireless, data networking, optical, voice, internet and semiconductors. Naturally, the most prized assets relate to mobile broadband technology used in 4G LTE standards. Google, meanwhile, had very publicly been in the running for the Nortel patents, with reports of intriguing bids such as $1,902,160,540 and $2,614,972,128 before apparently placing a bid of $3.14159 billion — all of these numbers represent mathematical constants: Brun’s constant, the Meissel-Mertens constant and the more familiar pi. For many, when Google missed out on the Nortel patents, this was seen as a victory for the more wily established players in the market. In August, however, Google acquired the assets of Motorola Mobility for $12.5 billion. Why would an online software giant whose business model is based on advertising want to buy a device manufacturer at a 63% premium on its market value? Some speculated that the acquisition would see Google channel its considerable resources away from the Open Handset Alliance and more fully behind Motorola. However, recent events — that saw Taiwanese handset maker HTC using Google’s freshly acquired patents to counter-sue Apple on an IPR issue — demonstrated the reason for the Motorola acquisition. Android ecosystem partners Google and its partners in the Android OS ecosystem are now able to fight fire with fire in the patent arena. It’s easy to see now why patents have become so interesting to the media since they represent a billion dollar industry integral not only to survival but to long term success. Unfortunately, patent lawsuits have become an unavoidable challenge for every player in this industry. ZTE is not immune from patent disputes, but we are committed to preventing unnecessarily aggressive competition and we reserve the right to take legal action to protect our own and our customers’ interest. Thanks to more affordable operating conditions and a highly educated, motivated, workforce, China has become one of the world’s leading manufacturers. Certain unfair prejudices remain regarding Chinese innovation. Yet with 313,854 patents registered China was the third highest filer of patents in 2010, just behind the US, which registered 326,945 and Japan at the top with 337,497. Japan has been the leading patent filer in the world for the past decade but its lead is narrowing, with its filings volume down 12% since 2006. China on the other hand is up 83%. As of first quarter of 2011, ZTE had been awarded membership of over 70 standards organizations and holds over 16,000 international standards proposals, with over 35,000 patents applied and over 6,500 international patents. Since December 31 2010 ZTE has held a total of 1,863 international patent applications as registered with WIPO, ranking the company second in the world in terms of international patent applications. ZTE’s innovative technologies in the fields of LTE, SDR, CRAN, 10G-EPON, PTN and solar-powered phones have been widely deployed around the world, creating fantastic market value for operators worldwide. Patent protection ZTE always complies with local laws and always takes IP protection very seriously. As a publicly listed company ZTE has consistently invested 10% of revenues into research and development, and has over 30,000 employees dedicated to R&D. ZTE’s IPR strategy is in line with the company’s globalization strategy and market forecast. In support of the company’s developments in high-end markets, ZTE will continually invest in the field of IPR and keep up the momentum in international patent applications. Our strategy will not rely on making acquisitions to secure IPR. Our strategy is to drive innovation. In addition to the 10% of revenues that we return every year to research and development, this year we announced an additional $15.5 million venture capital innovative fund created with the intention of driving innovations from within the company. You never hear a business leader saying its biggest asset is its patents. Patents cannot create, only people can create. At ZTE our biggest asset is our people. That’s why we’re actively seeking technology solutions, business models and management processes from our 80,000-strong employee base, including 30,000 research and development personnel. Anyone in the company can bid to receive part of the innovative fund to build their dream. That is true empowerment. The venture capital fund is part of ZTE’s ongoing efforts to stay ahead of changes in technological trends by seeking out investment ideas that will drive both the company and the telecom industry forward. To that end, we will support innovations in operations, strategy and management models, with the intention of creating a testing ground for ideas that break with tradition. Mobilization of our employees as creators of ideas for investments for the fund is one part our strategy to create bold new concepts and products in the telecom industry. The fund is just one way for ZTE to test the innovation waters and accumulate new ideas and management experiences. International innovation Externally, ZTE announced its plans to team up with several global telecommunications giants to create 10 international innovation centres in Europe and South America. The 10 centres will be established through cooperation with telecoms operators around the world. The centres will be comprised of location-specific cooperative operations including laboratories and operations and testing centres. Their focus will be to produce innovative technologies, products and business operations models. The new ideas and products produced will be applied to ZTE and its partners’ market and research and development strategies. The new innovation centres are not ZTE’s first efforts in collaborative research. The company also has demonstrated its commitment to joint projects by partnering with world-leading scientific institutions and universities. In early July 2011, ZTE signed a memorandum of understanding with Technical University Dresden with the purpose of opening a research and development centre in Germany. In China, ZTE has established collaborative research institutes with four research institutes and 19 universities including Peking University and Tsinghua University. The telecommunications industry is undergoing a critical period as much of the technology used by the industry is shifting from voice-based to data-based services. This technological shift has resulted in tremendous changes within the industry, including changes in traditional business models related to development and implementation of telecom technologies. It also has created opportunities for investment in the industrial landscape. The opportunities presented by the coming LTE era and ZTE’s latest breakthroughs in the US and European markets have become a driving force for ZTE to take the lead in international patent applications. ZTE owes its rapid growth and the stable expansion to the constant innovations and innovation has become the theme of the company’s development. GTB

Broadcast group pitches alternative to incentive auctions

In an apparent last-ditch effort to avoid government-backed incentive auctions, the Coalition for Free TV and Broadband has proposed a point-to-multipoint scheme for broadband distribution — something it claims is a more efficient and profitable way to distribute broadband signals. The plan asked the FCC to allow television stations to broaden their services, allowing them to transmit wireless traffic during peak periods of broadband usage in a way similar to traditional broadcasting of video signals. The broadcasters would share five percent of such ancillary revenue with the U.S. government, which the groups claim could be worth as much as $216 billion. Made up of mostly low-power television stations and backed by Sinclair Broadcast Group, the collection of broadcasters told an audience at the National Press Club that its plan would avert a spectrum shortage by providing a vastly more efficient way to deliver the bandwidth-intensive broadband traffic. It would provide, the group claimed, more than $60 billion in new revenue to the U.S. Treasury within the first 15 years. Though both Democrats and Republicans in Congress are close to passing a plan to authorize incentive auctions, the coalition called on them to consider alternatives within the existing television band. The auctions are now being considered on Capitol Hill by a super committee examining budget issues. “The 1996 Act authorizes television broadcasters to provide ‘ancillary’ services in their digital broadcasts, subject to remitting a portion of the revenues derived from those services to the Treasury,” the group said. “But no meaningful market for ancillary services has emerged. The reason is simple: Television broadcasters are required by law to operate with a very specific technical standard. Unlike wireless service and most other core communications services, the FCC prohibits broadcasters from freely adopting and implementing new technologies. This has artificially limited innovation, particularly in the provision of ancillary services.” It may be difficult to turn around the FCC, which is backed by the Obama Administration, so late in the game. Irwin Podhajser, chairman of group, met with commission and members of Congress last month in an effort to make sure that Class A TVs, LPTVs and TV translators are not forgotten in legislation involving the spectrum auction battle. Such low-power broadcasters are considered at risk since the FCC regards them as providers of secondary television services. Sinclair was the only major broadcaster to back the group. “The efficiency of broadcast distribution for bandwidth-intensive data, especially highquality video, cannot be matched,” said Mark Aitken, vice president of Advanced Technology of Sinclair Broadcast Group. “And most of the growth in mobile data demand is driven by mobile video use. Eliminating destructive regulations and giving broadcasters the flexibility to innovate and compete will yield huge service improvements for Americans and enormous gains for the Treasury.” NAB, the broadcasters’ chief lobbyist, has not directly opposed to auctions. However, it wants broadcasters to retain the same coverage areas and interference protections as now. Podhaiser sees a different scenario, with low-power stations and hundreds of full-power stations threatened by the government plan. The one-to-many broadcast scenario is not new. James Goodmon, chief of Capitol Broadcasting, pitched the idea to FCC Chairman Julius Genachowksi last winter. He said he received a cordial reception, but the FCC did not change its mind. It is not expected to this time either.

Why Microsoft Would Be Smart To Buy InterDigital

Microsoft Corp. (MSFT) might just be the most boring stock of all-time. Unless you are a billionaire who owns the stock for the measly 2.9% dividend they give and the low risk aspect of it, or you are the most conservative investor who has ever walked the planet, this stock has no pulse. Microsoft, for at least the past 10 years, has seemed content with what it is as a company. It figures everybody uses its Windows Office software and that is never going to change. However, if technology has taught us anything, it's that there will always be something that comes out better and cheaper at some point. Research In Motion (RIMM) could have used that advice a few years ago when it sat on its laurels and took for granted its consumer loyalty. Microsoft has at least started to show that it has some other ideas in mind by getting into the smartphone market and releasing the Windows Phone 7, which has had a somewhat lukewarm response. It hasn't been a complete disaster, however. This is where InterDigital (IDCC) comes into play. InterDigital, Inc. engages in the design and development of digital wireless technology solutions. The company offers technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, and IEEE 802-related products and networks. It holds patents related to the fundamental technologies that enable wireless communications. The company licenses its patents to equipment producers that manufacture, use, and sell digital cellular and IEEE 802-related products; and licenses or sells mobile broadband modem solutions, including modem IP, know-how, and reference platforms to mobile device manufacturers, semiconductor companies, and other equipment producers that manufacture, use, and sell digital cellular products. Currently IDCC is in a closed-bidding auction to sell the company to the highest bidder. This process has been ongoing since July 2011. Rumors have swirled for months as to what companies are bidding, bid amounts, whether or not there is a group bid as a consortium, and just about everything else in between. There have been reports that Apple (AAPL), Qualcomm (QCOM), Samsung (SSNLF.PK), and a host of others have been involved in the bidding. Most recently, it has been "rumored" that Intel (INTC) is now the leader to buy the company. At one time, Google (GOOG) was expected to be involved, but when they bought Motorola Mobility (MMI), most assumed that this took them out of the race. I'm not so sure about that. Google still has very weak patents and not enough of them, especially where 4G technology is concerned. This is what makes me believe Microsoft would be the perfect company to buy InterDigital. First of all, Microsoft has already lost lawsuits and eventually settled with VirnetX (VHC), another company who owns some important patents for instant messaging, voice over Internet protocol, smart phones, eReaders, and video conferencing. So, Microsoft has been on the losing end of patent lawsuit and infringement claims. Make no mistake, the patent wars going on with all of these companies aren't going away. The patents themselves can bring in billions for a company in the coming years. Whoever wins the InterDigital auction will be in a very good position to assert its power with these patents. Since Microsoft has already shown it is willing to enter the smartphone market, it can only be assumed that they will eventually have to enter other technology markets to stay relevant. Qualcomm has built its reputation off its patents. Microsoft can continue to do what it does with its software, but also hold some key patents, along with having another revenue stream. It makes too much sense. Microsoft has over $50 billion in cash on hand. It could easily buy InterDigital for $5 billion without any worries to its balance sheet. In fact, I would think investors would be happy to see Microsoft actually try to grow and venture out as a company as its stock has been trading in the same boring range for ages now. Microsoft buying InterDigital, Inc. would at least bring a some life to it.

Block media merger, say academics

Fearing the approval of an application by Want Want China Times Group to purchase China Network Systems would turn the former into a “media monster” monopoly, academics held a press conference yesterday to urge the National Communications Commission (NCC) to block the acquisition. On the eve of the second public hearing for the merger review today, academics said an Internet petition against the merger initiated by 54 academics had received the support of 78 civic groups and 2,136 individuals over six days. Want Want China Broadband already has major newspapers, magazines, publishing firms and cable and wireless TV news channels, National Taiwan University associate professor Hung Chen-ling (洪貞玲) said, adding that if the merger with CNS was approved, a multiple system operator that operates 11 cable TV and broadband Internet services would account for about 30 percent of the total media audience in Taiwan. Hung said academics feared the NT$70 billion (US$2.3 billion) merger attempt by the group — which has a track record of “bad behavior” for accusing NCC commissioners in its newspaper and filing suits on reporters — risked leading to high media concentration, harming freedom of the press. Shih Jun-ji (施俊吉), a research fellow at Academia Sinica’s Institute of Social Science, said it made no sense to continue the review when three of the seven review committee members had already walked out. “With only four members left, the committee is not competent to review this important case,” Shih said. The academics urged the commission to stop the review process and establish an ad hoc committee including citizen representatives and specialists from various fields to investigate the case. Hu Yuan-hui (胡元輝), an associate professor at National Chung Cheng University’s department of communications and president of the Foundation for Excellent Journalism, said that many studies showed that high media concentration undermines the quality of the media environment, not only in terms of lack of content diversity but also independence and the labor conditions of journalists. Lin Yuan-huei (林元輝), a professor at National Chengchi University’s department of journalism, said studies have shown that the China Times has provided much more entertainment news about Want Want group’s cable channels since the last merger. The academics said they also feared that with a large proportion of Want Want Group chairman Tsai Eng-ming’s (蔡衍明) profits being made in China, there was reason to suspect that messages favorable toward the Chinese government would affect media content in Taiwan. “Having control over the channels also means control over their content,” Shih said, adding that the merger could affect as many as 4 million viewers if it were allowed to proceed. Some academics also expressed support for the media to monitor government officials and political figures to protect the public interest. They criticized Chinese Nationalist Party (KMT) caucus whip Hsieh Kuo-liang’s (謝國樑) lawsuit against Internet news source New Talk reporter Lin Chau-yi (林朝億) for reporting that Hsieh had tried to pressure the commission into approving the merger. Association of Taiwan Journalists executive committee member Liu Ming-tang (劉明堂) said it was improper for legislators to file lawsuits against ordinary citizens to express their discontent.

Net neutrality rules aren't strong enough for mobile broadband

A North Carolina ISP has filed a lawsuit challenging the US Federal Communications Commission's net neutrality rules, with the ISP arguing the regulations aren't strong enough for wireless and mobile broadband providers like itself. The net neutrality rules, passed by the FCC in December, create stronger net neutrality rules for landline broadband providers than for mobile broadband providers, said the lawsuit, filed earlier this week by the Mountain Area Informational Network (MAIN), a non-profit based in Asheville, North Carolina. MAIN, which serves parts of western North Carolina through Wi-Fi and other wireless broadband services, would be treated as a mobile broadband provider under the FCC's rules. MAIN's lawsuit, filed Monday in the US Court of Appeals for the Fourth Circuit in Richmond, Virginia, is similar to one filed by advocacy group Free Press Wednesday in Boston. The two lawsuits are comparable, "except ours is specific to the challenges we face in a predominantly rural and mountainous region," said Wally Bowen, MAIN's founder and executive director. The FCC's rules are unenforceable and will not protect consumers' Internet freedoms, Bowen said Friday, the day MAIN announced the lawsuit. The ISP's lawsuit asks the court to overturn the FCC's so-called open Internet rules and force the agency to revisit the regulations. Grassroots innovators to have a level playing field "Our goal is to have the FCC strengthen these open Internet rules to make them meaningful and enforceable in order to preserve the Internet as an open platform for grassroots innovation," Bowen said. "We really want our grassroots innovators to have a level playing field and an open canvas to work with." The regulations bar wireline broadband providers from "unreasonable discrimination" against Web traffic, but don't have the same prohibition for mobile broadband providers. The rules prohibit mobile providers from blocking voice and other applications that compete with their services, but don't prohibit them from blocking other applications. The FCC's rules give mobile broadband providers more power to dictate what users can do on the Internet, Bowen said. "Granting more power to wireless network owners reduces mobile access to a second-class service, discriminates against low-income users who rely on mobile devices, and disadvantages rural areas where wireless is often the only broadband access available," he said. Opening the door to more lawsuits The FCC has argued that the net neutrality rules give providers certainty about the rules of the road. The agency will "vigorously oppose" any efforts to overturn the rules, the agency said in a statement this week. The FCC published the net neutrality rules in the Federal Register on 23 September, with publication opening the door for groups to file lawsuits. The FCC is likely to face additional lawsuits from other ISPs that want to overturn the rules completely. Earlier this year, Verizon Communications and MetroPCS filed challenges to the rules, but the US Court of Appeals for the District of Columbia rejected the lawsuits because the companies filed before the rules were published in the Federal Register. Verizon, which has said it plans to refile a lawsuit, has argued that the FCC does not have the authority to regulate broadband. MAIN is represented by the Media Access Project, a public interest law firm based in Washington, DC.

AT&T seeks to dismiss Sprint, C Spire lawsuits against T-Mobile purchase

AT&T (NYSE:T) has filed a motion to dismiss antitrust lawsuits files by Sprint Nextel (NYSE:S) and C Spire Wireless, formerly known as Cellular South, that seek to stop AT&T's proposed $39 billion acquisition of T-Mobile USA. "Sprint cannot wrap itself in the cloak of wireless service consumers' interest because Sprint is not a consumer but instead a competitor in the sale of wireless services," said AT&T's filing with a federal court in Washington. Sign up for our FREE newsletter for more news like this sent to your inbox! Sprint has argued that its operations would be harmed by AT&T's purchase when it comes to Sprint's ability to purchase the latest handsets, strike roaming deals and access the market for backhaul services. The company said it would respond to AT&T's motion by Friday. It also argued that C Spire didn't have a case and used a business proposal that was revealed a day after AT&T announced its intention to buy T-Mobile to prove it. AT&T included in its filing a copy of an email from C Spire's Chief Executive Hu Meena asking AT&T to alleviate its concerns about the merger by entering a type of network sharing agreement in the state of Mississippi and other areas in the southeast United States. "This inappropriate proposal confirms that what Cellular South fears is competition, not lack of competition," AT&T said in its filing. It also included another email from Meena disputing AT&T's interpretation of the first email. C Spire Vice President Eric Graham said in a statement that AT&T is distorting the record. "As the emails attached to AT&T's motion make clear, Mr. Meena never suggested that AT&T not compete in Mississippi or anywhere else," he said. "Mr. Meena raised the same issues that we have articulated for years." AT&T is also grappling with a lawsuit filed by the Department of Justice that aims to stop the acquisition. Meanwhile, Dish Network is urging the FCC, which is also reviewing the deal, to bring AT&T before an administrative law judge to determine whether the deal is in the best interest of consumers. Dish wants FCC approval to use 40 MHz of MSS S-Band spectrum to build an LTE-Advanced network, and argues that a delay in the approval process for the AT&T/T-Mobile deal could impact its network. "Timing is critical, and delay only benefits AT&T," Dish said in filing FCC, summarizing a meeting Wednesday with the staff of Commissioner Mignon Clyburn. "There is no set of conditions or divestitures that would resolve the substantial harms posed to the public and to competition."

Customers sue Frontier over broadband surcharge

Four customers of Frontier Communications have filed a class action lawsuit against the broadband and digital voice provider over a U$1 to $1.50 mystery charge on their monthly bills. Frontier customers Clint Rasschaert, Ed Risch, Pam Schiller and Verna Schuna allege that Frontier is illegally taxing them for broadband service, even though state and federal laws prohibit most broadband taxes. The so-called HSI surcharge is not authorized by government agencies, even though Frontier tells customers that all surcharges are required or authorized by the government, said the lawsuit, filed Tuesday in U.S. District Court for the District of Minnesota. The surcharge "is merely a junk fee that Frontier imposes on customers," Michelle Drake, the lawyer for the plaintiffs, wrote in the complaint. "The fee bears no relationship to any governmentally-imposed fee or regulation, and is nothing other than an effort by Frontier to increase prices above advertised prices under the false and misleading guise of governmental authority." The surcharge is listed under state taxes and other charges on customers' bills. "Any reasonable customer would believe its a state fee," Drake said. Drake, from the Nichols Kaster law firm in Minneapolis, said customers shouldn't have to check the sales tax calculations on their bills or know what government charges are acceptable on broadband bills. "This case is the result of a toxic combination of corporate greed and laziness," she said. "We shouldn't need to sue just to get big corporations to truthfully bill their customers." Some Frontier customers posting comments at DSLreports.com and Stopthecap.com have complained that the HSI surcharge is $1.50 a month on some bills. Frontier has alternatively explained the charge as a federal government charge, a charge for high-speed Internet service and a charge for customers out of contract, according to posters at those sites. The fee is not included in the advertised price for Frontier broadband service, Drake said. The plaintiffs would be less upset if Frontier simply included the charge in its advertised price, she said. "They can charge whatever price they want," she said. Frontier, in a statement, said it wouldn't comment on the allegations in the lawsuit. "We take all litigation claims and customer complaints seriously and will carefully evaluate and respond to the lawsuit at the appropriate time," the company said. "Frontier values its customers and we believe our charges and practices are consistent with applicable state and federal law." Frontier, based in Stamford, Connecticut, offers broadband, digital voice, and satellite television service. The company has about 3.3 million residential customers, 333,000 business customers, and 1.7 million broadband customers across 27 states, according to its first quarter financial report.

New Zealand Telco Overbills Subscribers

elecom New Zealand Limited (Telecom) has entered into a settlement with the local regulator, Commerce Commission, after it admitted violating a law by misleading its customers about the amount of broadband data they used. The telecommunications provider blamed inaccurate readings for roughly 97,000 customers on a software fault in broadband data usage meters and discovered the errors after receiving a number of complaints from customers, according to the Commerce Commission. Thanks to the inaccurate readings, about 47,000 customers were charged overage and early termination fees and adversely impacted in several other ways. The Commerce Commission said Telecom owned up to its mistake in June 2011 and pledged to refund customers. Customers already have received more than $2.7 million in refunds. “Telecom brought this issue to our attention as soon as they were made aware by their customers and have cooperated fully with the Commission," Commerce Commission Competition Manager Stuart Wallace said in a statement released Wednesday. “Due to Telecom’s immediate admission of a breach of the Fair Trading Act, followed by appropriate compensation to customers, the settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers."

Motorola Solutions CEO On The Google-Motorola Merger, Patents And Brand

Google’s August announcement that it would acquire Motorola Mobility surprised many people in the telecom industry. Among them: Motorola Solutions Chief Executive Greg Brown. The news was of particular interest to Brown since he served as CEO of the old Motorola, Inc. from Jan. 2008 until the company split in two pieces this past January. Since then, Brown has been CEO of Motorola Solutions, an independent, publicly traded company that inherited Motorola’s enterprise-focused businesses of two-way radios, bar-code scanners and wireless broadband networks. (For a look at Motorola Solutions’ future, see my magazine story, The Other Motorola.) Motorola Mobility was the other company created by Motorola, Inc.’s split. It took over the company’s consumer cellphone and set-top box divisions. It was the timing of Google’s announcement that startled Brown. “It was relatively quick,” he noted in an interview at Motorola Solutions’ Schaumburg, Ill. headquarters. Like Motorola Solutions, Motorola Mobility was formed in January, so Google’s news came just seven months after Mobility was established. Brown may have been surprised, but he said he understood the merger’s logic. The deal will give Google — and the many companies that produce devices based on its Android mobile platform — access to Motorola Mobility’s 24,000 patents. The common interpretation of the swap is that the patents will help Google and its Android partners defend themselves against lawsuits from competitors like Apple and Microsoft. Motorola Mobility, in turn, will gain financial stability from being part of Google. Brown appeared to agree with that view. “Mobility’s attractiveness to Google was primarily patent-driven,” he said. “The combination makes great sense.” Brown’s support for the acquisition stems, in part, from the fact that he doesn’t foresee any drawbacks for Motorola Solutions. Motorola Solutions and Motorola Mobility share two things: intellectual property and their iconic brand name. The allocation of those assets entailed a lot of thought and negotiation before Motorola, Inc.’s split, according to Brown. Fortunately for Motorola Solutions, both agreements were structured to withstand a change in control from a merger or acquisition. That means Motorola Solutions will maintain access — through a cross-license — to Motorola Mobility’s 24,000 patents, even after Google acquires Mobility. The cross-license is non-exclusive and viable only for the lives of the patents but should shield Motorola Solutions from future patent-related lawsuits. Brown isn’t overly worried about patent suits, anyway. Motorola Solutions’ sale of its wireless network infrastructure business to Nokia Siemens Networks earlier this year ratcheted down the company’s risk, said Brown. Most of the telecom industry’s big patent fights focus on the cellular and wireless technologies that power consumer cellphones and tablets and the networks that support them, not the walkie-talkies and business-centric computing devices Motorola Solutions makes. Motorola Solutions will also keep the Motorola name regardless of what Google decides to do with it. (Options for Google include keeping the name, winding it down or combining it somehow with Google’s own brand.) Motorola Mobility technically owns the name but Solutions has an exclusive license that is designed to act in perpetuity. Motorola Solutions simply needs to stay out of Mobility’s core market of consumer gadgets, much as it has since January. “We could make a [consumer] cellphone but can’t call it Motorola,” explained Brown. “Google could call its handsets Motorola or use the bat-wing [logo]. Whatever they do won’t affect what we do.” Brown also views Google’s $12.5 billion offer for Motorola Mobility as a sign that Motorola, Inc.’s split was the right move. “It reaffirms, more than anything, exactly why we separated the company,” he said. “There would be no way to get that value unlocked by keeping all these assets together.”