Crisis at Internet Radio

A battle over increased royalty payments for songs on online radio is moving into high gear, reports the Wall Street Journal.

Online radio companies are appealing a ruling that would double rates payable to record labels in three years. They are filing a motion to stay the ruling on the new rates, which are supposed to kick in, July 15, retroactive to 2006.

Since the March ruling from the Copyright Royalty Board — a three-judge federal panel charged by Congress with setting sound-recording royalty rates for online stations — Webcasters have swung into overdrive, asking the 49 million Americans who listen to Internet radio to call their representatives to ask them to back legislation in the House and Senate.

That bill, the Internet Radio Equality Act, would replace the higher rates. The bill is a huge victory for groups like the SaveNetRadio coalition. Jake Ward of SaveNetRadio called the new bill a “critical step to preserve this vibrant and growing medium.”

The per-play fee schedule of the IRE would still generate more than the music companies get from other sources. Satellite radio pays about 3.5% to 4% of revenue in performance royalties. Because airplay for years was seen as promotional, regular radio doesn’t pay anything, though the record labels are trying to change that.

So far, the Internet-radio legislation has been gathering sponsors at a brisk pace. In the House, it has 100 co-signers since being introduced by Rep. Jay Inslee (D., Wash.) and Rep. Donald Manzullo (R., Ill.) at the end of April, just weeks after the new rates became public. Sen. Ron Wyden (D., Ore.) and Sen. Sam Brownback (R., Kan.) introduced a similar version in the Senate on May 10.

A compromise proposal from several legislators would exempt the smallest Internet radio broadcasters from paying the higher fees. On May 17, those representatives sent a letter to SoundExchange — an offshoot of the Recording Industry Association of America that collects Internet music royalties — urging it to cut the smallest Webcasters a break.

A few days later, SoundExchange proposed exempting Internet radio services with revenue of $1.25 million or less. Critics said the proposal wasn’t acceptable because the yearly increases — which will raise the total fee to as high as 0.19 cent per play in 2009 from 0.0762 cent per play previously — are far too steep.

YouTube and EMI today announced a deal to make the music label’s content legally available on the web video site. Visitors to the page would have the option of watching officially-sanctioned music videos, but would also have permission to clip segments of videos to blend them as part of their own unofficial projects.

The Venezuelan government shut down Radio Caracas Television (RCTV), the country’s oldest private channel. “President Hugo Chavez is misusing the state’s regulatory authority to punish a media outlet for its criticism of the government”, said Jose Miguel Vivanco, Americas director at Human Rights Watch. Of the three commercial stations accessible in all parts of Venezuela, only RCTV has remained strongly critical of the government.

The station has turned to YouTube, where it now has its own channel for the show, El Observador.

San Francisco: Now it’s the Antennas!

The SF Examiner notes yet another screwball delay in San Franciso’s oft delayed municipal wireless network. The San Francisco Neighborhood Antenna Free Union (SNAFU) filed an appeal with the Board of Supervisors decision to exempt from environmental review the installation of an estimated 2,200 Wi-Fi, transmitters throughout The City.

The city’s five-member review panel ranked the EarthLink-Google package as the best deal for San Francisco — what is it — more than a year ago. Now the Board of Supervisors has 45 days to schedule a hearing on SNAFU’s appeal. If upheld, the agreement would have to undergo an environmental review, which generally takes about a year.

“We’re concerned about the potential health and environmental effects from the microwave radiation used by these transmitters,” SNAFU spokesman Doug Loranger said. “At this point, we’re simply saying, ‘You shouldn’t proceed at all without an environmental review.’”

In May, a Board of Supervisors committee postponed consideration of the deal until a July 11 hearing. Board members have said that the terms of the agreement should be better and some are advocating moving forward with a city-owned Internet network instead.

Bruce Wolfe of PublicNet SF Coalition believes San Francisco is selling off public rights-of-way. They would like to see a citywide fiber ring with a WiFi layer on top as they work towards a municipal FTTP as a community effort. The proposals by SFLAN and BARWN would bring ownership and management of the network closer to the people.

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FCC: Beltway Vs Valley

Senator John Edwards sent a letter to the FCC yesterday urging commissioners to use the upcoming 700 megahertz auction to make the Internet more affordable and accessible, regardless of where people live or how much money they have.

Edwards is visiting California today to attend a town hall meeting with Google employees where he will discuss this issue among others.

Edwards backs the open-access approach advocated by Frontline Wireless, consumer groups and Internet giants. Edwards called on the FCC to set bidding and service rules for the upcoming auction to ensure that the public airwaves benefit everyone, not just big companies.

Edwards asked the FCC to:

  • Set aside as much as half of the spectrum for wholesalers who can lease access to smaller start-ups, which would improve service in rural and underserved areas.
  • Require anyone who wins rights to this valuable public resource not to discriminate among data and services and to allow any device to be attached to their service.
  • Make bidding anonymous to avoid collusion and retaliatory bids.

Edwards’ letter follows this month’s release of Al Gore’s new book, “The Assault on Reason”, notes the Washington Post. Gore voiced his opinion on net neutrality debate, which will decide whether Internet companies can charge for preferred access to content. Gore writes, “neutrality should be the central tenet that will set us on a path toward an open, democratic Internet where free speech and free markets are encouraged.”

Cyren Call, another startup pursuing a public-private national wireless solution, is against any licensing conditions that scares off major cellular companies — now auction partners of theirs.

The Federal Communications Commission, which meets today, tends to favor large cellular companies. It has allocated the 700 MHz spectrum using cellular-like paired channels, rather than the more cost/efficient single channel (COFDMA) approach favored by Mobile WiMAX. Mobile WiMAX proponents say their approach, using beam-forming, scalable subchannels and MIMO, can deliver more speed and range for one-tenth the cost.

But cellular companies have the money. The auctions are all about cash on the barrel head, not feel-good public policy with debatable outcomes.

Bush appointed commissioners (like Kevin Martin and Deborah Tate) may be tempted to follow NTIA chief Michael Gallagher (right) out the revolving door. Law firms like Wiley-Rein (below) and cellular lobby organizations would be a rewarding destination after their FCC tenure, with $1M/year salaries. Or more.

The 700MHz band is widely believed to be our best shot for creating U.S. competitiveness through broadband wireless. Will it be a new opportunity for the public or another revolving door compromise? Made with a wink and a nod.

Yes, it’s crass — but the potential for rule making that is self-serving is real.

In other news, Sprint Nextel has won part of the federal government’s $20 billion Networx Enterprise contract, this week. The GSA also awarded part of the contract to AT&T, Level 3, MCI and Qwest to provide voice, Internet and wireless services to 135 federal agencies. None of the companies will receive a specified portion of the $20 billion contract but only the eligibility to compete for government services specified under the contract.

In March, the GSA snubbed Sprint for rivals AT&T, Verizon and Qwest. In a related contract, General Dynamics and Verizon won the $10B Integrated Wireless Network contract (below).

That contract will allow Verizon to install thousands of 700 MHz radio towers in every community in the United States. That contract may enable Verizon to leverage their government subsidy (though IWN), and expand into commercial 700 MHz services in rural areas.

Verizon would like to kill upstart competitors like Google and Frontline, and get RUS funding to do it. The FCC may help them do just that. Google, Frontline and other upstarts plan faster, cheaper “open” architecture with public/private partnerships and a “net neutral” approach to content rather than a “walled garden”. It could be a “cleaner” deal — nobody owes anybody anything.

It’s basic public policy. You don’t have to be a wonk to get it.

Which way will FCC commissioners go? Will we get a truly competitive greenfield or will cellular monopolies be allowed to dominate the 700 MHz space?

We should know soon enough.

Save the Internet and Fractals of Change suggests you write the FCC Commissioners;,,, and

Related Dailywireless stories on 700 MHz include; 700MHz Battle Begins, AT&T “Open” to 700MHz — Not, General Dynamics Wins IWN Contract, Martin: Sharing is Good, Harold Feld on 700MHz, FCC Indecisive on 700MHz, FCC Decides on 700MHz Rules Today, Small Ops Squeezed Out of 700MHz?, General Dynamics Wins IWN Contract, AT&T, Verizon & Qwest Share $50B Contract, Networx: $50B Phone Contract Due, Consumers to FCC: 700MHz Democracy Now!, Civil War in 4G, Nextwave Buys IP-Wireless, FCC Firming Up 700MHz Rules?, Verizon’s $6B Smackdown, Alcatel Does EVDO in DC 700 MHz Net, Frontline’s 700MHz Pitch: Sharing is Good, Tom Ridge: Answer Cyren Call, Verizon Makes its Move for Universal Service Fund, Nextwave Buys IP-Wireless, Consumers to FCC: 700MHz Democracy Now!, Frontline Files 700MHz Plan with FCC, 700MHz in 10 Steps, National Broadband: Fee & Free, FCC to Rural Users: 700MHz is the Ticket and Oregon’s $500 Million Statewide Wireless Network.

Clearwire Interview

Clearwire today announced the completion of its acquisition of all the 2.5 GHz wireless broadband spectrum previously owned or controlled by AT&T and the former BellSouth.

With this acquisition, Clearwire’s U.S. spectrum holdings increased to cover an estimated 223 million people with varying depths of spectrum. In addition, Clearwire holds spectrum in Europe that covers approximately 199 million people. Clearwire holds one of the world’s largest portfolios of WiMAX spectrum.

The biggest WiMAX-related investment in 2006 went to Clearwire, which got $900 million from Intel Capital to develop and deploy portable and mobile WiMAX networks. Intel funded Clearwire in part because the chip maker plans to integrate mobile WiMAX into upcoming notebooks.

Clearwire then went public earlier this year. Its stock has fluctuated, and analysts predict the company will continue losing money for several years, but they consider Clearwire a good long-term investment.

Beceem Communications, which makes mobile WiMAX chipsets, recently raised an additional $40 million, and increases the seven-year-old company’s funding to about $150 million. Aperto Networks, secured another $19 million, boosting its capital to $139 million and base station provider Navini Networks recently received $50 million from the venture capital arm of Arcapita Bank and Austin Ventures.

WiMAX aims to differentiate from existing services by bringing broadband connectivity to a host of new devices, starting with new computing devices such as Ultra Mobile PCs (UMPCs) and Mobile Internet Devices (MIDs), and then branching out into consumer electronics devices such as digital cameras.

Clearwire’s field trial in Hillsboro, Oregon, a suburb of Portland, was jointly conducted with Intel and Motorola. It used infrastructure equipment based on the IEEE 802.16e mobile WiMAX standard. The first phase of the field trial focused on coverage, capacity and speed. recently sat down with Scott Richardson, Clearwire’s Chief Strategic Officer, to discuss its service offerings and latest developments around WiMAX.

Currently Clearwire is offering proprietary wireless services using radio equipment from Motorola/Nextnet. Will Clearwire offer true WiMAX Broadband Services using certified WiMAX equipment?

Yes, subject to equipment being available we expect to deploy mobile WiMAX in the first half of next year.

Does your business model hinge on a largely residential customer base, a business-to-business model or some kind of mix?

Our business plan focuses on delivering a unique, high-value service with increasing average rate per user and penetration opportunities as we add additional features, functionality and value-added services to our network.

Starting next year we expect to see mobile WiMAX chipsets being built into PCs and handheld devices that should further enhance our market opportunity. As more and more mobile WiMAX end user devices become available and as we begin to deploy mobile WiMAX networks, we believe we will have tremendous opportunities to increase our average rate per user and penetration as we migrate to a per user or per device model.

Is there anything holding you back with your deployment plans in the US and other markets?

We are in a great position for sustained long-term success. We have a strong management team lead by Craig McCaw and many other communications industry leaders, we have a WiMAX spectrum footprint across the US and Europe that is second to none and next generation technology supported by industry leaders like Intel and Motorola.

What is Clearwire’s view on Net Neutrality and offering complete open access to the internet to mobile WiMAX users?

Clearwire supports the Net Neutrality principles set forth by the FCC in its 2005 Broadband Policy Statement. As would any responsible facilities-based broadband service provider, Clearwire implements reasonable network and bandwidth management practices to protect and ensure the integrity and performance of our unique wireless broadband network.

It appears that Clearwire intends to deploy wireless broadband services in Tier II markets first and then target major metropolitan areas later. Can you comment on your deployment Strategy?

We build in a wide range of markets from major metropolitan areas to small, rural communities, and markets of all sizes in between. We are currently in 38 US markets, covering 9.1 million people in more than 400 municipalities in 12 states. We are also in four international markets in Denmark, Belgium, Ireland and Mexico.

Clearwire is targeting some cities that plan to have municipal wi-fi networks in place. Do you see Muni Wi-Fi deployments as a serious competitor to your service offering?

Clearwire also works with municipalities. For example, we have an agreement with the city of Grand Rapids, Michigan to provide our wireless broadband network throughout the city’s 45 square miles. Our agreement with Grand Rapids is expected to include WiMAX/WiFI hybrid host spots that involve the placement of numerous WiFi hotspots in strategic locations throughout the city.

Mobile WiMAX will connect 8% of the world’s 1.1 billion mobile broadband subscribers by 2012, accounting for nearly 88 million users worldwide, according to a report from Parks Associates, which also forecasts 52% of these subscribers will be from Asian countries while North and South America will account for another 28%.

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MetroPCS: Bring on 700MHz

MetroPCS (PCS), a Dallas, Texas-based regional wireless carrier, is looking to jump into the fray for the 700 MHz spectrum, reports Om Malik. The company said this morning that it will raise $300 million to finance its spectrum purchase.

Top 10 Highest AWS Bidders
Bidders Net total of high bids
1. T-Mobile $4.2 billion
2. Verizon Wireless $2.8 billion
3. SpectrumCo $2.4 billion
4. MetroPCS $1.4 billion
5. Cingular $1.3 billion
6. Cricket $710 million
7. Denali Spectrum $365 million
8. Barat Wireless $127 million
9. AWS Wireless $116 million
10. Atlantic Wireless $81 million
Click here to find out who is backing these bidders.

The company spent $1.4 billion to acquire licensees in last year’s AWS auctions, and is currently sitting on spectrum that covers 135 million POPs including lucrative markets like New York and Las Vegas.

Malik opines that $300 million is a drop in the bucket for the 700MHz auction.

Alltel also made clear its interest in the upcoming 700 MHz spectrum auction, reports RCR News. In its filings with the FCC, Alltel urged the FCC to ignore a “last-minute, self-serving” plan from Frontline Wireless which calls for the commission to set aside a 10-megahertz block. Alltel does not favor 10 MHz of spectrum that could be shared by public-safety users. Alltel wants it all.

Related 700 MHz DailyWireless stories include; 700MHz Battle Begins, Google to FCC: Real-time Auction?, AT&T “Open” to 700MHz — Not, Oregon’s $665M Wireless Net Killed, AWS: It’s Done, Leap Into AWS Phone Service, John Malone in Space and 700 MHZ Spectrum Grab?.

Palm’s Folio

Palm today announced a smart phone companion product today called Foleo. The Foleo will connect via Bluetooth to a Treo device running either the Palm operating system or Windows Mobile. It has a relatively large screen and full-sized keyboard to help users edit e-mail and office documents.

It delivers web access with your smartphone or WiFi making the connection (YouTube video).

When you’re in a café, airport or hotel with Wi-Fi, the Palm Foleo will take advantage of hotspots. Out of Wi-Fi range? With the built-in Bluetooth, you can also access the web anywhere you have phone coverage.

The Foleo runs Linux, has a 10.2-inch screen, and a full-sized keyboard. Battery life is five hours of real-world use, Palm’s Jeff Hawkins says. It starts automatically — there’s no such thing as booting it, sleep mode, or hibernation. It’s got an e-mail button that takes you to e-mail that’s an exact replica of the mail on your phone (which doesn’t have to be a Treo, he says).

Foleo will be available this summer for $599; $499 after a $100 rebate. It will be available online and in Palm stores initially–it doesn’t need to be sold through phone carriers.

Palm’s Jeff Hawkins unveiled the Foleo today at the Wall Street Journal’s D conference in Carlsbad, California.

Jeff Hawkins (audio interview), of Palm Pilot fame, wrote the book “On Intelligence“and started a company called Numenta to apply neuroscience to computing. Lockheed Martin’s Advanced Technology Labs (LMT), is talking with Numenta about “cognitive computing” for DARPA projects involving UAVs.

Lockheed Martin initiated a two-year, $6.6-million study contract to develop a Polymorphous Computing Agent Architecture (PCAA) that will perform cognitive tasks for military systems.

The neocortex is a memory system, according to Hawkins.

All the brain does is store and recall patterns. Every sensory input — whether sight, sound, touch, taste, or smell — is translated into a sequence of patterns that is stored in the neocortex. “Through exposure,” Hawkins explained, “it builds a model of the world. If you step off a plane in a new city and walk through the terminal, your brain will compare that terminal to others you’ve been to before and will predict that when your foot hits the carpet it will encounter a firm surface that will support your weight. If your foot slips through the carpet and you fall into a vat of chocolate pudding, you will be surprised. If the carpet sprouts tentacles and grabs your leg, you will be surprised. If anything happens that is not consistent with your past experience of carpets in terminals, you will be surprised.

That’s because your brain is always predicting what will happen next based on what has happened in the past. The last time you were in a terminal, your foot hit the carpet, then you took another step, and another, and another, all without incident. Similarly, when you hear the opening bars of a familiar song, your brain anticipates what notes will come next because it is comparing what it hears to the stored pattern of the entire song. Intelligence, then, is pattern recognition. The brain is intelligent, Hawkins said, because “it lets you imagine the future.”

A recent development at Tel-Aviv University could bring us one step closer to storing rudimentary memories on a manmade device, says Eureka Alert. Reportedly, a new experiment created memories “in an artificial culture of live neurons.”