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October 7, 2011

In a victory for net neutrality opponents, a judicial panel chose the D.C. Circuit Court of Appeals in a random lottery Thursday to decide where the net neutrality case will be heard. The D.C. Circuit is considered the most likely to overturn the controversial net neutrality rules of the courts that were in play to review them. The lottery outcome therefore gives an early advantage to Verizon, which sued to overturn the FCC regulations passed in December. "As we made clear in our filing, we felt this was the appropriate venue," said Verizon spokesman Ed McFadden.

Verizon argued in its legal challenge that that D.C. has exclusive jurisdiction over the net neutrality issue because the FCC rules modify wireless licenses. The FCC filed a motion to dismiss that suit, but now it won't matter because the D.C. circuit has been chosen at random. "Verizon has good reasons for wanting to be in the D.C. Circuit," said John Hane, a telecommunications lawyer at Pillsbury Winthrop. "The D.C. Circuit has construed the FCC's ancillary authority narrowly, notably, just a couple of years ago, when it rejected an FCC rule that required wireless carriers to meet high standards for backup power at tower sites."

Republican FCC Commissioner Robert McDowell, who believes the rules won't stand up in court, told POLITICO earlier Thursday that location does matter, though he declined to offer an opinion on the reputations of the different courts. Andrew Jay Schwartzman, policy director of Media Access Project, does not plan to ask the court to send the case elsewhere. MAP filed on behalf of four clients in four different circuits in defense of the net neutrality rules. "The FCC stands ready to defend its open Internet order in any court of appeals," an FCC spokesman said. Politico


Federal Communications Commission Chairman Julius Genachowski said Thursday the agency plans to overhaul an $8 billion federal phone subsidy program, calling it "broken." Mr. Genachowski said the overhaul will include changes in how money from the federal Universal Service Fund is distributed to telecommunications companies as well as changes to a federally regulated rate system for phone companies.

"Broadband has gone from being a luxury to a necessity," Mr. Genachowski said in a speech Thursday. He offered few specifics about the plan during his speech. FCC officials want to overhaul the system so that it pays for new broadband lines and service in rural areas without high-speed service instead of covering the costs of phone service. The agency estimates about 18 million American households don't have access to high-speed Internet service.

Mr. Genachowski said his proposed changes would encourage phone companies to bring high-speed Internet to half of U.S. households without service within the next five years. Consumers pay a monthly charge on their phone bills to fund the Universal Service Fund, which subsidizes phone service in rural areas and for low-income Americans. The fund has ballooned over the years as more wireline and wireless phone companies have asked for subsidies to cover services.

Mr. Genachowski also said the FCC intends to modernize the intercarrier-compensation system, which sets fees telecommunications companies pay each other for carrying or delivering phone calls. The system was designed before lower-cost Internet phone services took off. Large phone companies, which have advocated many of the changes Mr. Genachowski announced Thursday, mostly applauded his plan, saying it was time for the FCC to change the system. "Absent reform, these rules will simply loiter on to foster more litigation and arbitrage and ultimately stifle innovation and the benefits of broadband for consumers," said Bob Quinn, AT&T Inc.'s senior vice president of federal regulatory affairs, in a statement.

USTelecom, the telecom industry trade group, voiced some concerns about the plan, which fundamentally changes the economics of the telecom industry, mostly because details of it are still not available. The FCC's four commissioners are scheduled to vote on the plan Oct. 27, although some of them are likely to seek changes to Mr. Genachowski's plan before then. Consumer groups have complained that changes to the intercarrier-compensation system may result in higher costs for consumers because it will allow phone companies to raise a monthly service charge above the current $6.50 per month cap. State regulators have also voiced worries that the FCC's plan may decrease their consumer protection authority.

Consumers in rural areas may see their phone bills rise, since Mr. Genachowski said phone companies will be allowed to "modestly rebalance rates in areas" where consumers are paying less because of federal subsidies. Mr. Genachowski's aides declined to offer more details about how many consumers might be affected or how much their monthly bills may rise. The FCC should not "allow companies to raise landline phone rates, which hit seniors and underserved communities especially hard," said Parul Desai, policy counsel for Consumers Union, publisher of Consumer Reports magazine. New York Times


It looks like Dish Network is trying to make peace with pay cable channel Starz at the expense of Cinemax.

Earlier this year, Starz sued Dish after the satellite broadcaster started offering the channel free for one year to subscribers as part of a promotion. Now, Dish is pushing its 14 million subscribers to trade in their last three months of free Starz for free Cinemax. The move by the satellite broadcaster comes one month after Starz said it would no longer make its content, including original shows and theatrical movies from Disney and Sony, available to Netflix. Distributors such as Dish are wary of Netflix and see it as a direct competitor. The decision to give Starz away for a year was seen by many industry observers as retribution for Starz's then cozy relationship with Netflix.

Whether the Starz for Cinemax offer will score Dish brownie points with Starz remains to be seen. A Dish spokesman said the legal battle between the two is ongoing. There may not be many takers for Dish's offer. Cinemax does not have near the amount of original programming as Starz and the theatrical movies it carries have already run on sister service HBO. Los Angeles Times


The memorial flowers, candles, and notes of touching tribute left outside Apple stores on several continents may say it all about the extraordinary impact of Apple Inc. cofounder Steve Jobs, a man certain to be regarded as among the most unique American industrialists.

Jobs, 56, who died Wednesday after a long battle with cancer, was the rarest of corporate titans in that his customers, admirers, and critics alike somehow felt a deep personal connection to him. That stemmed, no doubt, from the fact that Jobs' company put its music players, cellphones, laptops, and tablets in the pockets, purses, and backpacks of so many millions in the past decade. Long before the advent of the revolutionary iPod, iPhone, and iPad, Jobs and company cofounder Steve Wozniak had altered the very notion of a computer - by creating the first desktops that could be worked by people without pocket protectors.

Since Jobs' elegantly designed products also changed the way his customers around the globe interacted, entertained, and informed themselves, it's no wonder that he developed a devoted, even fanatical, following. But his impact was far broader than just among customers who valued products that cost a good deal more than the competition's. With his savvy marketing of Apple as an un-computer company operating under a countercultural ethos, Jobs conveyed the idea that innovation could be "cool" - his trademark description for any and all Apple gadgets. The company's quirky "Think Different" slogan summons a creative economy that avowedly believes its best days are not behind it. And even as Apple outsourced much of its manufacturing abroad, its pledge that any Apple device "just works" stands as a refreshing commitment to quality control in a throwaway society.

For all that, the outpouring of public tributes may be a welcome sign that people were touched by Jobs' personal struggle. Despite being a perfectionist and demanding boss, his work ethic was impressive; he retired only weeks before his death Wednesday. And even with his penchant for privacy, Jobs referenced his illness during a 2005 commencement to advise college graduates to make the most of their time. In effect, he told them to strive to be what Jobs himself was called this week - an American original. Philadelphia Inquirer editorial

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