FCC panel wants to tax Internet-using businesses and give the money to ISPs

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A Federal Communications Commission advisory committee has proposed a new tax on Netflix, Google, Facebook, and many other businesses that require Internet access to operate.

If adopted by states, the recommended tax would apply to subscription-based retail services that require Internet access, such as Netflix, and to advertising-supported services that use the Internet, such as Google and Facebook. The tax would also apply to any small- or medium-sized business that charges subscription fees for online services or uses online advertising. The tax would also apply to any provider of broadband access, such as cable or wireless operators.

The collected money would go into state rural broadband deployment funds that would help bring faster Internet access to sparsely populated areas. Similar universal service fees are already assessed on landline phone service and mobile phone service nationwide. Those phone fees contribute to federal programs such as the FCC’s Connect America Fund, which pays AT&T and other carriers to deploy broadband in rural areas.

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AT&T/Verizon lobby misunderstands arrow of time, makes impossible claim

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The telecom industry lobby group that represents AT&T and Verizon has consistently claimed that net neutrality rules hurt broadband investment. Yet the same lobby group has released data showing that fiber deployment grew significantly while net neutrality rules were in effect.

Even more surprising: the lobby group, USTelecom, also recently claimed that an increase in broadband network investment that happened before the net neutrality repeal was somehow caused by the repeal that hadn’t yet taken effect.

USTelecom released a new analysis last week, saying that, “from the end of 2015 to mid-2017, US fiber deployment grew from 21 percent to 29 percent of homes and competitive availability of wired broadband at 25Mbps download and 3Mbps upload [speeds] increased from 31 percent to 55 percent.” Fixed wireless deployment has also helped expand broadband access, USTelecom wrote.

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Ericsson software problem has been causing widespread cell phone outages

A problem with the software in Ericsson equipment is causing outages across the world including O2 users in Great Britain and Softbank users in Japan, according to a report in the Financial Times earlier today.

Ericsson took blame for the outage in a press release. It apparently involves faulty software on certain Ericsson equipment used on the affected company’s mobile networks. While Ericsson indicated it involved multiple countries, it appeared to try to minimize the impact by stating it involved “network disturbances for a limited number of customers.” The FT report indicated that it was actually affecting millions of mobile customers worldwide.

Regardless, the company said that an initial analysis attributed the problem to an expired software certificate on the affected equipment. Börje Ekholm, Ericsson president and CEO, said they were working to restore the service as soon as possible, which probably isn’t soon enough for people who don’t have a working cell phone at the moment.

“The faulty software that has caused these issues is being decommissioned and we apologize not only to our customers but also to their customers. We work hard to ensure that our customers can limit the impact and restore their services as soon as possible,” Ekholm said in a statement.

While the press release went onto say they are working to restore the service throughout the day, as of publishing this article, the O2 outage maps still showed problems in the London area and throughout Great Britain.

The AT&T and Verizon outage pages are also currently showing outages in the US. We reached out to Ericsson by phone and email to confirm if this was part of their software problems, but had not heard back by the time we published. If we do, we will update this story.

(Note that Verizon owns this publication.)

Still a year away from launch, Meg Whitman and Jeffrey Katzenberg’s Quibi keeps adding talent

Video won’t start rolling on Meg Whitman and Jeffrey Katzenberg’s new bite-sized streaming service with the billion dollar backing until the end of 2019, but talent keeps signing up to come along for their ride into the future of serialization.

The latest marquee director to sign on the dotted line with Quibi is Catherine Hardwicke, who will be helming a story around the creation of an artificial intelligence with the working title “How They Made Her” according to an announcement from Katzenberg onstage at the Variety Innovate summit.

Hardwicke, who directed ThirteenLords of Dogtown, and, most famously, Twilight, is joining Antoine Fuqua, Guillermo del Toro, Sam Raimi and Lena Waithe, in an attempt to answer the question of whether Whitman and Katzenberg’s gamble on premium (up to $6 million per episode) short-form storytelling is a quixotic quest or a quintessential viewing experience for a new generation of media consumers.

Katzenberg also revealed in a LinkedIn post that Quibi would be working on a basketball related series with Steph Curry’s production company. He wrote:

I announced a new docu-series by Whistle called “Benedict Men” coming exclusively to Quibi. “Benedict Men” will be executive produced by Stephen Curry’s Unanimous Media and will give viewers an inside look at one of the most unique high school basketball teams in America at St. Benedict’s Prep in Newark, New Jersey.

St. Benedict’s Prep is an all-boys secondary school founded on the core belief ‘What Hurts My Brother Hurts Me,’ and aims to foster a legacy of strong character, community, leadership, and faith. As one of the top athletic high schools with a storied basketball program and the highest graduation rate in New Jersey, the series will follow the brotherhood of young men who seek to balance life in complicated surroundings.

In some ways, the big adventure backed by Katzenberg, the former chairman of Walt Disney Studios and founder of WndrCo, and every major Hollywood studio including Disney, 21st Century Fox, Entertainment One, NBCUniversal, Sony Pictures Entertainment, Alibaba Goldman Sachs, is the latest in an everything old is new again refrain.

If blogs reinvented printed media, and podcasts and music streaming reinvented radio, why can’t Quibi reinvent serialized storytelling.

Again and again, Whitman and Katzenberg returned to an analogy from the early days of the cable revolution. “We’re not short form, we’re Quibi,” said Whitman, echoing the tagline that HBO made famous in its early advertising blitzes. That Whitman and Katzenberg’s project to take what HBO did for premium television and apply that to mobile media is ambitious. Now industry-watchers will have to wait until 2019 at the earliest to see if it’s also successful.

In the interview onstage at a Variety event on artificial intelligence in media, Katzenberg cited Dan Brown’s DaVinci Code as something of an inspiration — noting that the book had over one hundred chapters for its five hundred pages of text. But Katzenberg could have gone back even further to the days of Dickens and his serialized entertainments.

And right now for the entertainment business it really is the best of times and the worst of times. Traditional Hollywood studios are seeing new players like Netflix, Amazon, Apple, and others all trying to drink their milkshake. And, for the most part, these studios and their new telecom owners are woefully ill-equipped to fight these big technology platforms at their own game. 

Taking the long view of entertainment history, Katzenberg is hoping to win networks with not just a new skin for the old ceremony of watching entertainment but with a throwback to old style deal-making. The term serialization here takes on greater meaning. 

Quibi is offering its production partners a sweetheart deal. After seven years the production company behind the Quibi shows will own their intellectual property, and after two years those producers will be able to repackage the Quibi content back into long form series and pitch them for distribution to other platforms. Not only that but Quibi is fronting the money for over 100% of the production.

Katzenberg said that it “will create the most powerful syndicated marketplace” Hollywood has seen in decades. It’s a sort of anti-Netflix model where Katzenberg and Whitman view Quibi as a platform where creators and talent will want to come. “We are betting on the success of the platform — and by the way it worked brilliantly in the 60s, and 70s and 80s.” Katzenberg said. “Hundreds of TV shows were tremendous successes and [like the networks then] we don’t want to compete with our suppliers.”

In addition to the business model innovations (or throwbacks, depending on how one looks at it), Quibi is being built from the ground up with a technology stack that will leverage new technologies like 5G broadband, and big data and analytics, according to Whitman.

Indeed, launching the first platform built without an existing stable of content means that Quibi is preparing 5,000 unique pieces of content to go up when it pulls the curtains back on its service in late 2019 or early 2020, Whitman said.

And the company is looking to big telecommunications companies like Verizon (my corporate overlord’s corporate overlord) and AT&T as partners to help it get to market. Since those networks need something to do with all the 5G capacity they’re building out, high quality streaming content that’s replete with meta-tags to monitor and manage how an audience is spending their time is a compelling proposition.

“We want to work to have video that good on mobile [and] ramp up content in terms of quantity and quality,” Whitman said. That quality extends to things like the user interface, search features and analytics.

“We have to have a different search and find metaphor,” Whitman said. “It takes 8 minutes to find what you’re looking for on Netflix… We will be able to instrument this with data on what people are watching and using that in our recommendation engine.”

Questions remain about the service’s viability. Like what role will the telcos actually play in distribution and development? Can Quibi avoid the Hulu problem where the various investors are able to overcome their own entrenched interests to work for the viability of the platform? And do consumers even want a premium experience on mobile given the new kinds of stars that are made through the immediacy and accessibility that technology platforms like YouTube, Instagram, and Snap offer?

“Where the fish are today is a phenomenal environment,” Katzenberg said of the current short-form content market. “But it is an ocean. We need to find a place where there are these premium services.”

AT&T says it’s getting that 5G Samsung phone, too

Samsung announced yesterday that it’s set to bring a 5G phone to market in the first half of next year, name-checking Verizon in the promise. This morning, however, AT&T was quick to note that it will also be getting its hand on the still-unnamed handset in the first half of 2019.

The carrier issued a next day press release which, like Verizon’s, is less focused on information about the handset than self-congratulatory statements about the two companies involved. AT&T promises “unforeseen possibilities for the tech,” while pledging to “bring the best in technology and innovation to our customers.”

The company’s also quick to note that the untitled Samsung isn’t its first planned 5G device. That title belongs to a mobile hotspot the company announced back in October. The company hasn’t offered up a release date on that one, but the first half of 2019 seems like a pretty safe bet for that product, too.

As noted yesterday, company like OnePlus and Motorola have already promised to release 5G handsets at some point next year. Apple, on the other hand, isn’t expected to go 5G with the iPhone until 2020.

AT&T makes it more expensive to cancel DirecTV or Internet service

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AT&T will start charging customers for the full month after they cancel TV or Internet service, ending its customer-friendly practice of providing a prorated credit for the final month.

Even if you cancel on the first day of a new billing period, you’ll be charged for the full month and service will continue for the rest of the month whether you want it or not. To avoid paying for a month of service that you don’t want, you’d need to cancel by the last day of the previous billing period.

The change will take effect on January 14, 2019 and apply even when a customer is paying on a month-to-basis and no longer under contract.

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AT&T details its streaming service plans as it weighs a sale of its Hulu stake

AT&T may be ready to sell its stake in Hulu, the company revealed in an analyst presentation on Thursday. The company currently owns a 10 percent stake in the service by way of WarnerMedia, as a result of its Time Warner acquisition. But AT&T today is running its own streaming services, including live TV service DirecTV Now aimed at cord cutters, and a more lightweight WatchTV. It’s also preparing to launch yet another direct-to-consumer streaming service in 2019 that leverages its WarnerMedia properties.

The company offered a few more details about this new service during the presentation, noting that it will have three tiers of service.

The entry-level package will be focused on movies, followed by a premium service with original programming and “blockbuster movies.” The third service will include content from the first two tiers, then add an “extensive library of WarnerMedia and licensed content,” including classics, kids & family programing, comedy, and other theatrical releases and niche content.

The service will launch into beta in Q4 2019, AT&T said, and will complement WarnerMedia’s existing business. It will also work across devices, and will expand over time to include third-party content through partnerships.

As for selling its stake in Hulu, the company is “looking for opportunities to monetize assets” that are not essential to its current strategies, explained AT&T CFO John Stephens. He said the company was looking at its “minority investments in things like Sky México or Hulu or a variety of other things.”

The mention of the Hulu sale was a part of a larger discussion about paying down $18 billion of AT&T’s $20 billion in debt by the end of next year, which involved raising up $8 billion in cash by the sale of some assets. The Hulu stake could be worth up to $930 million, Variety notes.

Also of note was the company’s not-so-vague threat that WarnerMedia would not be renewing its licensing deals with rival streaming services when their rights expire.

Asked how the new direct-to-consumer effort will be able to compete with incumbents, WarnerMedia CEO John Stankey responded that over the next 18 to 24 months, “we’re going to see a pretty substantial structural shift that’s going to occur…some of the incumbents in that are in that space today should expect that their libraries are going to get a lot thinner,” he said.

“75 to 80 percent of their total viewing tonnage is sitting on a lot of that licensed content. So their pressure is they’ve got to make this pivot over the next 18 to 24 months to get people off of viewing the licensed content that maybe sits in our library or sits in a Disney/Fox library, and get it onto their own,” Stankey added.

The company believes that, over time, it will be able to bring in enough new subscribers to its streaming offers to offset the declines related to cord cutting, which is impacting its satellite TV company DirectTV. In Q3 2019, the company lost 359,000 net DirecTV subscribers as more consumers dropped pay TV in favor of streaming services, like Netflix.

 

Wireless throttling: Senators ask four major carriers about video slowdowns

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Three US Senate Democrats today asked the four major wireless carriers about allegations they’ve been throttling video services and—in the case of Sprint—the senators asked about alleged throttling of Skype video calls.

Sens. Edward Markey (D-Mass.), Richard Blumenthal (D-Conn.), and Ron Wyden (D-Ore.) sent the letters to AT&T, Verizon, Sprint, and T-Mobile, noting that recent research using the Wehe testing platform found indications of throttling by all four carriers.

“All online traffic should be treated equally, and Internet service providers should not discriminate against particular content or applications for competitive advantage purposes or otherwise,” the senators wrote.

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