Obama Administration

DOJ opens Google publishing deal inquiry

The DoJ is opening an anti-trust inquiry into Google’s settlement with authors and book publishers, a deal whose execution was delayed by an agreement just this week.

The concern being voiced is that the deal effectively gives Google an exclusive right to index and support searching of millions of books, thus giving it a unique (and some say unfair) market advantage. Google is becoming the “Microsoft of our age” in terms of legal issues and for the same reason; Microsoft and Google both faced a need to extend and exploit a basic brand into adjacent areas for continued revenue growth. While Google CEO Eric Schmidt is an Obama insider, the Administration will have to be very careful not to create appearances of a rigged process.

New report looks at broadband stimulus policy differences

The dust has all but settled on the broadband stimulus, which is clearly now going to be directed at a modest expansion of broadband to underserved areas. The bill has no money for broader stimulation of broadband deployment of any sort, and the only measure it contains that might impact the broadband industry overall (the “minimum speed” provisions for aid qualification) are now the focus of debate and may be dropped from the bill.

There is a fundamental policy issue emerging between the Obama Administration and the Democratic Congress in our view: The former wants very pragmatic and useful legislation, and the latter wants to address partisan issues and ideology. How that balance will be struck overall is yet to be known.

We have released the second audio brief in our TMT Advisor Planners’ Briefing series, covering the prospects for and impact of broadband stimulus in the U.S. under Obama’s economic stimulus package. As the briefing says, this program is very unlikely to live up to industry expectations, and we offer our views of the impacts of the package in this special audio report.

This is the second report in our series and you must register with us to receive these briefings by email. If you haven’t registered you’ve already missed one report, so don’t delay. Click here for details. Register now via email at:  tmtadvisor at cimicorp.com. Be sure to mention the TMT Advisor Planners’ Briefing series in your subject line.

Obama broadband stimulus plan: Reality vs. industry dreams

The broadband stimulus plan, part of Obama’s broader economic stimulus, appears to be all but a done deal, but the value of the package falls far short of what some had hoped.

As currently proposed, the initiative would be focused on rural and underserved areas and would likely come largely in the form of low-interest loans and grants. There is no talk now of tax credits or accelerated depreciation.

Keep in mind, though, that this is only the beginning of the road for the stimulus bill and that there are already some differences between House and Senate approaches. However, the total amount involved now is between $6 and $8 billion, which falls far short of the $44 billion to $100 billion some had advocated.

As we indicated previously, our model was unable to validate benefits for a stimulus more than about $20 billion. The most significant factor about the new form of the program is that it would offer nothing to incumbents for their normal service expansion, a sticking point for some critics of former proposals. Apart from this, though, we are still hearing that the FCC would change its definition of “broadband” to somewhere between 4 and 8 Mbps, something that would spur competition between telcos and cable.

The UK is also rolling out a universal broadband program. The speeds are low (2 Mbps) but the goal of touching every household is probably more ambitious than those here.

Slower U.S. service provider revenue expected; unclear on spending

Wall Street is now expecting the U.S. telcos to face much slower growth in 2009, with revenues barely up over 2008, and has thus revised the stock price targets for giants AT&T and Verizon.

We agree that at the revenue level, there will be few bright spots for service providers in 2009 in the U.S. or anywhere else, but the real question is whether the decline in revenue will impact their spending plans.

Even without broadband stimulation from the Obama administration, we believe that U.S. operators would not cut broadband deployment at all and would likely make only modest deferrals in projects. Even now, we have still not had a conclusive statement of a budget cut from any Tier One.