Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (55 page)

43.
As John Malone put it in 2009: “It's a very powerful interlock between [sports] programming that not everybody's interested in but those who are are intensely interested in it. And distribution” (“David Faber and John Malone,” video of interview, 38:42–39:19).

Chapter 8. When Cable Met Wireless

1.
Apple, “Apple's App Store Downloads Top 10 Billion,” news release, January 22, 2011,
http://www.apple.com/se/pr/library/2011/01/22Apples-App-Store-Downloads-Top-10-Billion.html
; Josh Lowensohn, “Despite Growth, Google Trails Apple in App Dollars Spent,”
CNET News
, November 21, 2011,
http://news.cnet.com/8301-27076_3-57328804-248/despite-growth-google-trails-apple-in-app-dollars-spent/#ixzz1nRaZmFsS
(“Apple continu[es] to mop up about 85–90 percent of money spent on mobile apps”); Steven Mostyn, “Apple to Ship 30 million iPads in 2011,”
Tech Herald
, June 30, 2011,
http://www.thetechherald.com/articles/Analyst-Apple-to-ship-30-million-iPads-in-2011
; Bianca Bosker, “Apple Announces Plans for $100 Billion Cash Hoard,”
Huffington Post
, March 19, 2012,
http://www.huffingtonpost.com/2012/03/19/apple-announces-plans-for-cash_n_1362212.html
; Sam Gustin, “How Many iPads Can Apple Sell?”
Time
, March 16, 2012,
http://business.time.com/2012/03/16/how-many-ipads-can-apple-sell/
.

2.
Cisco,
Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update
,
2011–2016
, February 14, 2012,
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
.

3.
Neil Smit, “Comcast, Time Warner Cable, Bright House Networks and Verizon Wireless Enter into New Agreements,”
Comcast Voices
(blog), December 2, 2011,
http://blog.comcast.com/2011/12/comcast-time-warnercable-bright-house-networks-and-verizon-wireless-enter-into-new-agreements.html
.

4.
Mike Robuck, “Comcast's Smit, TWC's Britt Saddle Up on Verizon Wireless Deal,”
CED Magazine
, December 5, 2011,
http://www.cedmagazine.com/blogs/2011/12/comcasts-smit-twcs-britt-saddle-up-on-verizon-wireless-deal
.

5.
Alex Sherman, “Verizon Wireless Allies with Cable in $3.6 Billion Deal,”
Bloomberg
, December 2, 2011,
http://www.bloomberg.com/news/2011-12-02/verizon-wireless-allies-with-cable-carriers-in-3-6-billion-spectrum-deal.html
; Deborah Yao, “Comcast CFO: Not Interested in Acquiring Wireless Network,”
SNL Insurance Daily
, September 21, 2011.

6.
Sherman, “Verizon Wireless Allies with Cable in $3.6 Billion Deal”
U.S. Telecommunications, U.S. Cable & Satellite Broadcasting, U.S. Internet: Where to Invest in
2012?
(New York: Bernstein Research, January 5, 2012), 7; Alex Sherman, “Cablevision Falls After Discounting Leads to Cash Flow Drop,”
Bloomberg
, May 3, 2012,
http://www.bloomberg.com/news/2012-05-03/cablevision-profit-tops-estimates-as-tv-service-gains-customers.html
.

7.
Shares of U.S. wireless subscribers at the end of 2010: Verizon (33.6 percent), AT&T (31.4 percent), SprintNextel (16.4 percent), T-MobileUSA (11.1 percent). All other regional and pre-paid carriers accounted for the remaining 7.5 percent of the more than 304 million subscriptions. SNLKagan data, cited in Free Press, “Why the AT&T-T-Mobile Deal Is Bad for America,” available at
http://www.freepress.net/files/ATT-TMobile.pdf
, at 5. In 2010, Verizon's average EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) wireless margin was 47 percent while AT&T's was 41 percent. By contrast, Sprint's average wireless margin was 18 percent; U.S. Cellular's was 20 percent; Leap Wireless's was 21 percent; and TMobile's was 29 percent. See John Fletcher, “Verizon Wireless: The Best Spectrum, Wireless EBITDA,”
SNL Kagan
, March 16, 2011, cited in Free Press Petition, 27, available at
http://www.freepress.net/files/FreePress_PetitiontoDeny_ATT_TMobile.pdf
.

8.
Marguerite Reardon, “AT&T Verizon Price War Debunked (FAQ),” CNETNEWS, January 20, 2010,
http://news.cnet.com/8301-30686_3-10437595-266.html
. Also in 2010, Verizon eliminated its unlimited data plan for smartphones, migrating new customers into capped plans with overage charges. See Karl Bode, “Verizon Announces Wireless Pricing Changes,”
DSLReports.com
, January 15, 2010,
http://www.dslreports.com/shownews/Verizon-Announces-Wireless-Pricing-Changes-106425
).

9.
Edward C. Baig, “New iPad's Speedy 4G Can Use Up Data Allotment in a Flash,”
USA Today
, March 21, 2012,
http://www.usatoday.com/tech/columnist/edwardbaig/story/2012-03-21/ipad-data-4g/53692024/1
;
Anton Troianovski, “Video Speed Trap Lurks in New iPad,”
Wall Street Journal
, March 22, 2012,
http://online.wsj.com/article/SB10001424052702303812904577293882009811556.html?mod=wsj_share_tweet#articleTabs%3Darticle
.

10.
Nielsen, “Smartphones Account for Half of All Mobile Phones, Dominate New Phone Purchases in the U.S.,” March 29, 2012,
NielsenWire
(blog),
http://blog.nielsen.com/nielsenwire/online_mobile/smartphones-account-for-half-of-all-mobile-phones-dominate-new-phone-purchases-in-the-us
.

11.
Patrick R. Parsons,
The Creation of the Media: Political Origins of Modern Communications
(New York: Basic Books, 2004), 288; Final Report and Order, 21 F.C.C.2d 307, reconsidered in part, 22 F.C.C.2d 746 (1970), aff'd sub nom,
General Telephone Co. S.W. v. United States
, 449 F.2d 846 (5th Cir. 1971); Chapter 2, text at note 60.

12.
In the Matter of Use of the Carterfone Device in Message Toll Tel. Serv.
, 13 F.C.C.2d 420 (1968).

13.
“Appropriate Regulatory Treatment for Broadband Access to the Internet over Wireless Networks,” WT Docket No. 07-53, Declaratory Ruling, 22 F.C.C. Rcd 5901, 19–26, 29–33 (2007).

14.
Handsets are often tied to both a network type and a particular carrier. AT&T uses a different information scheme (Global System for Mobile Communications, or GSM) from Verizon's (Code Division Multiple Access, or CDMA); this means that most handsets, which support just one of these schemes, cannot be used on the other network.

15.
Kevin Fitchard, “How Verizon Might Kill Any Hope for LTE Interoperability,”
GigaOM
, April 18, 2012,
http://gigaom.com/mobile/how-verizon-might-kill-any-hope-for-lte-interoperability/
; Kevin Fitchard, “IPad vs. iPad: Which 4G Tablet Should You Choose?”
GigaOM
, March 15, 2012,
http://gigaom.com/apple/ipad-vs-ipad-which-4g-tablet-should-you-choose/
.

16.
Ryan Whitwam, “What Is a Bootloader, and Why Does Verizon Want Them Locked?”
ExtremeTech
, March 20, 2012,
http://www.extremetech.com/computing/120771-what-is-a-bootloader-and-why-does-verizon-want-them-locked
; comment by Antonio Damian Garrison, March 2012,
http://www.extremetech.com/computing/120771-what-is-a-bootloader-and-why-does-verizon-want-them-locked/2#comment-454704316
.

17.
“The
700
MHz Auction: Public Safety and Competition”: Hearing Before the S. Comm. on Commerce, Science, and Transportation
, 110th Cong. (2007) (Statement of Amol R. Sarva on behalf of the Wireless Founders Coalition for Innovation); Simon Wilkie,
Open Access for the
700
MHz Auction: Wholesale Access Licensing Promotes Competition and Could Increase Auction Revenue, Issue Brief #21
(Washington, D.C.: New America Foundation, Wireless Future Program, July 2007).

18.
David B. Wilkerson, “Wireless ‘Not Enough’ to Support Video Future,”
MarketWatch
, June 16, 2011,
http://articles.marketwatch.com/2011-06-16/industries/30869054_1_4g-wireless-platform-panel-discussion
.

19.
Eli Noam, “Let Them Eat Cellphones: Why Mobile Wireless Is No Solution for Broadband,”
Journal of Information Policy
1 (2011): 470–85.

20.
Stacey Higginbotham, “Oh No He Didn't: AT&T's CEO Calls DSL Obsolete,”
GigaOM
, July 19, 2011,
http://gigaom.com/broadband/oh-no-he-didnt-atts-ceo-calls-dsl-obsolete/
.

21.
Stacey Higginbotham, “Why Verizon Is Killing DSL & Cheap Broadband,”
GigaOM
, March 6, 2012,
http://gigaom.com/broadband/why-verizon-is-killing-dsl-cheap-broadband/
.

22.
Richard Morgan, “Verizon Wireless, Cable Companies: What's the Fuss?”
The Deal
, December 9, 2011,
http://www.thedeal.com/magazine/ID/043301/commentary/verizon-wireless-cable-companies-whats-the-fuss.php
; author's correspondence with telecommunications analyst Mitchell Shapiro, May 20, 2012.

23.
Anton Troianovski, “Verizon Pitches Mobile Video,”
Wall Street Journal
, March 30, 2012, available at
http://online.wsj.com/article/SB10001424052702304177104577312062215910998.html?mod=ITP_marketplace_1
.

24.
“When the chairman of the Federal Communications Commission (FCC) earlier this month revealed he had circulated among his fellow commissioners a draft proposal to ensure continued Internet openness, the criticism started rolling in. … AT&T, Comcast, Verizon and Time Warner Cable have collectively employed more than 60 [lobbying] firms for net neutrality-related work” (Amanda Becker, “Draft Internet Rules Draw Lobbying Crowd,”
Washington Post
, December 20, 2010).

25.
“Google and Verizon outlined a joint set of proposed rules for the Internet on Monday … intended to allow for flexibility for the future. The ‘nondiscrimination’ rule would not apply to wireless services, as well as to what the companies called ‘additional, differentiated online services’ of the future” (Ted Johnson, “Net True, Rivals Propose Road Rules,”
Variety
, August 10, 2010).

26.
“You [as the developer of the app] get 70% sales revenue” (“Apple iOS Developer Program: Distribute Your App,” Apple Corporation, accessed February 27, 2012,
https://developer.apple.com/programs/ios/distribute.html
).

27.
For example, Apple rejected an app from Google in 2009 that would allow use of Google Voice on the iPhone. The fury that erupted prompted the FCC to demand an explanation. While in response Apple denied rejecting the proposed Google app and insisted that the app was still under review, the company also said that “the application has not been approved because, as submitted for review, it appears to alter the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail. Apple spent a lot of time and effort developing this distinct and innovative way to seamlessly deliver core functionality of the iPhone (“Apple Answers the FCC's Questions,” Apple Corporation, August 21, 2009,
http://www.apple.com/hotnews/apple-answers-fcc-questions/
).

28.
“We have the nation's fastest mobile broadband network and serve 100.7 million wireless subscribers” (“AT&T Company Information, U.S. Presence,” AT&T, accessed February 27, 2012,
http://www.att.com/gen/investor-relations?pid=5711
);
Peter Svensson, “AT&T Q4 2011: Massive $6.68 Billion Loss on TMobile Deal Collapse, iPhone Subsidies, Pension Adjustments,”
Huffington Post
, January 26, 2012,
http://www.huffingtonpost.com/2012/01/26/att-q4-2011_n_1233533.html
.

29.
David Lieberman, “‘The Daily’ Launches on iPad for 99 Cents a Week,”
USA Today
, February 3, 2011, available at
http://www.usatoday.com/money/media/2011-02-02-the-daily-ipad_N.htm
.

30.
Staci D. Kramer, “Murdoch Hopes Apple Will Lower Its Share Of ‘The Daily’ Take,”
PaidContent
, February 3, 2011,
http://paidcontent.org/article/419-murdoch-hopes-apple-will-lower-its-share-of-the-daily-take/
.

31.
Internet Trends
, Morgan Stanley, April 12, 2010, 8, available at
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CD0QFjAA&url=http%3A%2F%2Fwww.morganstanley.com%2Finstitutional%2Ftechresearch%2Fpdfs%2FInternet_Trends_041210.pdf&ei=V7NLT4elK4To0QHf5ZmdDg&usg=AFQjCNGv_ShtPcQ8l9iw-BIcxhjen3CAzA&sig2=vmr7Z5MuMTe4QkYzF5rEcg
.

32.
Stephanie Baghdassarian and Carolina Milanesi,
Forecast: Mobile Application Stores, Worldwide
,
2008–2014
(Stamford, Conn.: Gartner, December 17, 2010).

33.
Walt Mossberg, “Show Me the Money,”
Wall Street Journal
, June 2, 2009 (brackets in the original).

34.
David Pogue, “Cable TV in Pursuit of Mobility,”
New York Times
, March 2, 2011.

35.
“Time Warner Cable has been wrestling with programmers for months over this issue. In March, the company released an app that allowed its paying subscribers to watch dozens of cable channels on the iPad at home. The app was challenged by some programmers, led by Viacom, which owns channels like MTV and Nickelodeon and which accused Time Warner Cable in a lawsuit of ‘unlicensed distribution’ of its content” (Brian Stelter, “Time Warner to Subsidize Subscribers’ TV Device,”
New York Times
, August 23, 2011).